TDS on Consolidated Bill.
This query is : Resolved
25 June 2010
One of our reciving Bill of Freight in consolidated form, which shows seperate disclosure of out of pocket expense and charges.
Advice me whether TDS to be deducted on Service Charges or Total amount
Advice me whether TDS to be deducted on Service Charges or Total amount
25 June 2010
If one bill is raised showing seperately for reimbursement of expenses, TDS will be deducted on the total amount of bill including reimbursement. If seperate bill is raised, deduct TDS on the freight charges only.
25 June 2010
Agreed with experts.
09 July 2010
what will happen, if single bills shows seperae disclosure of Reimbursement and Service Charges...
02 May 2013
I was expecting section reference or Case reference from the experts
27 July 2025
Here’s a clear explanation about **TDS on consolidated bill showing separate reimbursement and service charges**:
---
### TDS Deduction on Consolidated Bill with Separate Reimbursements
* **If the bill is a single consolidated invoice**, even if it shows **separate disclosure of out-of-pocket expenses (reimbursements) and service charges**, **TDS should be deducted on the entire bill amount** (i.e., both service charges + reimbursements).
* This is because the reimbursement amount is not invoiced separately and is part of the consideration for the service provided.
* However, **if the reimbursement amounts are billed separately (via separate bills/invoices)**, then TDS should be deducted **only on the service charges portion** and **not on reimbursements**.
---
### Relevant Legal & Practical References:
* **CBDT Circular No. 728 dated 31.3.1996** clarifies that reimbursements are liable to TDS when they form part of a composite bill and are not separately billed.
* **Case Law:**
In the case of **South Indian Bank Ltd. vs. CIT (2008)**, it was held that when the amount is claimed as reimbursement without markup and separately billed, it is not subject to TDS.
* **Section 194C / 194J** (depending on nature of services) applies to the **payment for services rendered**, not the reimbursement of actual expenses paid on behalf of the client.
---
### Summary Table:
| Bill Type | TDS on Reimbursement | TDS on Service Charges | Comments |
| -------------------------------------------------- | -------------------- | ---------------------- | ----------------------------------- |
| Single consolidated bill (service + reimbursement) | Yes | Yes | TDS on total amount |
| Separate bill for reimbursement | No | Yes | TDS only on service charges portion |
---
If you want, I can help you draft a formal note with section references and case laws for your internal use or for compliance teams. Would you like that?
---
### TDS Deduction on Consolidated Bill with Separate Reimbursements
* **If the bill is a single consolidated invoice**, even if it shows **separate disclosure of out-of-pocket expenses (reimbursements) and service charges**, **TDS should be deducted on the entire bill amount** (i.e., both service charges + reimbursements).
* This is because the reimbursement amount is not invoiced separately and is part of the consideration for the service provided.
* However, **if the reimbursement amounts are billed separately (via separate bills/invoices)**, then TDS should be deducted **only on the service charges portion** and **not on reimbursements**.
---
### Relevant Legal & Practical References:
* **CBDT Circular No. 728 dated 31.3.1996** clarifies that reimbursements are liable to TDS when they form part of a composite bill and are not separately billed.
* **Case Law:**
In the case of **South Indian Bank Ltd. vs. CIT (2008)**, it was held that when the amount is claimed as reimbursement without markup and separately billed, it is not subject to TDS.
* **Section 194C / 194J** (depending on nature of services) applies to the **payment for services rendered**, not the reimbursement of actual expenses paid on behalf of the client.
---
### Summary Table:
| Bill Type | TDS on Reimbursement | TDS on Service Charges | Comments |
| -------------------------------------------------- | -------------------- | ---------------------- | ----------------------------------- |
| Single consolidated bill (service + reimbursement) | Yes | Yes | TDS on total amount |
| Separate bill for reimbursement | No | Yes | TDS only on service charges portion |
---
If you want, I can help you draft a formal note with section references and case laws for your internal use or for compliance teams. Would you like that?
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