Tds on reimbursement

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

19 April 2012 Whether tax is required to be deducted u/s 194C if separate bill is issued for reimbursement of expenditure relating to it.

Yogesh Agarwal

Yogesh Agarwal (Expert)
Follow

19 April 2012 Yes TDS is required to be deducted on re-imbursement under section 194C..

Message likes : 1 times

Durgesh Laddha

Durgesh Laddha (Expert)
Follow

19 April 2012 Every thing depends on nature of exp. and work. Example : Carpenter doing some work and he issue separate bill for wood, then you should not deduct tds on wood, you should deduct TDS on labour bill only.

If you want, plz tell me actual case.

Message likes : 1 times

Querist : Anonymous

Querist : Anonymous (Querist)

20 April 2012 ok sir
Actually on the bill of reimbursement "agency charges" is written. I'll go in further detail and will inform you whole case.
Thanks

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
Follow

27 July 2025 This is a classic situation where the **nature of the expense** determines whether TDS applies on reimbursement. Here's a quick guide:

---

### Key principle:

* **TDS is applicable only on the *nature of service* or *work* provided, not on pure reimbursement of cost components like materials or out-of-pocket expenses.**

---

### Applying that here:

* If the **bill clearly separates "agency charges" (service)** and **"reimbursement" (expenses incurred on your behalf, e.g., printing, courier, travel)**, then:

* **TDS should be deducted only on the agency charges (service part) under the appropriate section (e.g., 194C, 194J)**
* **No TDS is deducted on the reimbursement amount**, since it is a pass-through expense.

* If the bill **does not separate charges and reimbursement**, and is a lump sum, then the entire amount is liable for TDS.

---

### Example:

| Description | Amount | TDS Applicability |
| ----------------------------- | ---------- | ----------------- |
| Agency Charges (service) | Rs. 10,000 | Deduct TDS |
| Reimbursement (printing cost) | Rs. 5,000 | No TDS |

---

### What if separate bill issued for reimbursement?

* If the vendor issues **a separate bill or invoice for reimbursement of expenses** without any markup, **TDS is generally not deductible on that reimbursement bill**.

---

### Your case (agency charges + reimbursement):

* Since the bill mentions **agency charges**, ask for **separate invoices** for agency service and reimbursement expenses.
* Deduct TDS on **agency charges only**.
* No TDS on reimbursement.

---

If you share the full case or bills, I can help you confirm exactly how to treat the amounts! Would you like to?

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now

Join the CA Students WhatsApp Community for ICAI Updates, Trending Courses & Notes!

Similar Resolved Queries

Unanswered Queries

Popular
Recent

Trending Online Classes

Direct Tax Laws & International Taxation May 26,Sept 26 & Jan 27

CA Arvind Tuli

Enroll Now
Audit Fast Track Recorded Batch For May 26,Sept 26 & Jan 27

CA Aarti Lahoti

Enroll Now
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English

CA Bhanwar Borana & CA Shubham Keswani

Enroll Now

view all classess

Meet our CAclubindia PRO Members

siddhesh satardekar

santhosh singireddy

madhu sudan

RAJENDRA PARAKHI

kavita goel

Subscribe Now

Tds on reimbursement

Similar Resolved Queries

Trending Online Classes

Meet our CAclubindia PRO Members

Quick Links

Browse by Category

Latest Job Openings

Senior Executive

Manager- Finance and Compliance

GST CONSULTANT

GST CONSULTANCY

Accountant

CA Final

Article Assistant

Associate CA