Service tax on travelling rieumbersement from clieny

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ca walia umesh (Querist)

18 February 2009 Whether service tax is to be charged on the bill for travelling bill reimbursement claims submitted by a chartered accountant to the client or not

Rajesh Kumar

Rajesh Kumar (Expert)

18 February 2009 In general if the reimbursement amount is in relation to the taxable service, such payment should be included in the value of the services and hence service tax should be charged on that.

CA Nitin Wadhwani

CA Nitin Wadhwani (Expert)

18 February 2009 Yes.

K V Subba Rao

K V Subba Rao (Expert)

19 February 2009 Yes as per following extract from an Article published in
https://www.thehindubusinessline.com/2008/02/16/stories/2008021650250900.htm

"...if an auditor undertakes an audit of an outstation client and incurs travelling expenses of Rs 20,000 (airfare) and charges a fee of Rs 20,000, he ends up paying service tax not on Rs 20,000 but on Rs 40,000, which include travelling expenses"

ca walia umesh

ca walia umesh (Querist)

19 February 2009 Whether service tax is to be charged on the bill for travelling bill reimbursement claims submitted by a chartered accountant to the client or not

Dayal

Dayal (Expert)

20 February 2009 All expenses, incurred in relation to rendering of the service, then yes traveling bill reimbursement will form a part of the taxable amount. Since traveling is inter connected with the service for rendering the service, it will form a part of the taxable amount.

To reduce such burden of cost it is advisable that the client arranges for the travel of the CA.

K V Subba Rao

K V Subba Rao (Expert)

20 February 2009 Sri Dayal has given a good practical answer. These days it is possible to book tickets from anywhere and arrange for delivery at different place. From the Client's point of view, in any case, he is bound to foot the bill. If initial payment is made by CA, the Client has to pay (reimburse) Service Tax

So it is a good tax planning measure within the framework of law

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