St on reimbursement

This query is : Resolved

anita (Querist)
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23 December 2015 Dear Experts,
A flats construction company has hired A engineer to review the construction of flats, however expenses incurred in relation to lodging, fooding, travelling of engineer is to be reimburse him later, query. 1) weather company is liable to pay ST under RCM on service taken by engineer, 2) weather company is liable to pay ST on reimbursement to engineer or not,

Regard
Pankaj Gupta

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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23 December 2015 1 Company is not liable to pay ST under RCM.
2 If the engineer claims ST on reimbursement company is liable to pay.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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23 December 2015 Service Tax has to be charged on reimbursement of expenses also.

IN the Finance Bill 2015, the Explanation to Section 67 - Clause (a) has been substituted. As per the new amendment, all reimbursement expenses incurred by the service provider, have to be included in the consideration.

The amendment is as below:

'(a) "Consideration” includes–

(i) any amount that is payable for the taxable services provided or to be provided;

(ii) any reimbursable expenditure or cost incurred by the service provider and charged, in the course of providing or agreeing to provide a taxable service, except in such circumstances, and subject to such conditions, as may be prescribed;

(iii) ............................................'

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