Tds deduction on reimbursment if seprate column used ?

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uday singh Negi (Querist)
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02 September 2013 dear sir,

our CHA raised bill to us, where he use separate column for reimbursement and taxable services and he charged service tax on taxable amount only ( no separate bill or debit note for reimbursment )

so my query is

tds deduction on which amount

1) gross amount
2) or gross amount less reimbursement

Ganeshbabu K

Ganeshbabu K (Expert)
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03 September 2013 Yes,, even i have seen so many clearing agents do following this format of billing
.
.
they shows expences seperately and will charge service tax only on taxable services
.
.
No TDS applicabble on re-imbursement expences if original bill paid by him was provided for us,,more over we can also take service tax credit on those reimbursement expences with supporting of these original bills because clearing agent is just our pure agent ,,he acted on our behalf ,,so in legal we are entitle to take credit
.
.
TDS applicable on value on which service tax is caluculated(including servicetax)

uday singh Negi

uday singh Negi (Querist)
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03 September 2013 ganesh sir,

first of all i would like to thanks for your valuable answer but i am still confused, as far as CBDT Circular No.714, dated 3.8.1995 is concerned they provided some clarification below one is among from them

Question 30 : Whether the deduction of tax at source under sections 194C and 194J has to be made out of the gross amount of the bill including reimbursements or excluding reimbursement for actual expenses ?
Answer : Sections 194C and 194J refer to any sum paid. Obviously, reimbursements cannot be deducted out of the bill amount for the purpose of tax deduction at source.

but here they did not allude any separation, column if any , as far as i understood from above explanation if both amount included or billed in one invoice then tds should be deducted on gross amount instead of taxable amount

please correct if i am wrong

is their any case law or notification available for this situation

thanks

awaiting for your answer

Ganeshbabu K

Ganeshbabu K (Expert)
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04 September 2013 I do agree..But That will not include re-imbursement expences paid by pure agent
.
.
here clearing agent is our pure agent,,he just expenced from his pocked on our behalf and will claim the same,,No tds required for this
.
.
Refer

CBDT Circular No.715, dated 8.8.1995 it was clearly given that if re-imbursement of expences are also included in gross amount of bill tds to be deducted where as if seperate bill raised for re-imbursement of expences tds not applicable,,if re-imbursement expences seperately show in bill also permitted in the same line

Ganeshbabu K

Ganeshbabu K (Expert)
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04 September 2013 In order to address the issue whether tax is required to be deducted at source, in respect of reimbursement of expenses, it will be necessary to keep in mind the following two aspects, viz :

(i) Tax is deductible at source under Chapter XVII-B of the Act, only in respect of payment of income or other sum made by the person responsible for such payment, viz. tax-deductor to other person being the tax-deductee, and

(ii) Reimbursement of expenses does not partake the nature of income in the hands of the payee of
such expenses

it may be any sum but we cannot deduct tds on re-imbursement expences as it is not partake income in the hands of person as explianned above provided they have to give separate bill for re-imbursement of expences

uday singh Negi

uday singh Negi (Querist)
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04 September 2013 dear sir,
thanks for your answer

but can you provide me the circular no. 715, where it is mentioned that

if re-imbursement
of expences are also included in gross amount of bill tds to be deducted where
as if seperate bill raised for re-imbursement of expences tds not applicable,,if reimbursement
expences seperately show in bill also permitted in the same line
( AS YOU MENTIONED ON ABOVE EXPLANATION )

because in circular no. 715 i can't see the above given explanation,i can see only question no.30 and its ansewer, may be i couldn't find out but can you please provide me the same
my email id is uday622@gmail.com

thanks

Ganeshbabu K

Ganeshbabu K (Expert)
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04 September 2013 I may quoted wrong circular number..

refer below caselaws in support to my views

ITO v. Dr. Willmar Schwabe (2005) 3 SOT

The view has been taken by way of many judicial decisions and to name few are:

*Mitra Logistic Pvt. Ltd. V. ITO, ITAT, Kolkata;

**DCIT vs. Lazard India Pvt. Ltd., ITAT, Mumbai;

***ITO V. M/s Planet Herbs Life Science Pvt. Ltd., ITAT, Delhi;

****Income Tax Officer vs. Travels & Shopping (P) Ltd

Therefore in my view, it is worth mentioning that, where the amounts are reimbursed and are clearly identifiable, duly supported with concrete evidence of payment & thereof separately charged, there shall be no requirement of TDS on such amount paid fully supported by the above judicial pronouncements.

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uday singh Negi

uday singh Negi (Querist)
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04 September 2013 thanks sir,

why i was asking for these type of explanation , because suppose i don't deduct tds and if our auditor asked for an explanation on that time i should be ready for answer to him with such a case law or notification etc

thanks a lot

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