17 October 2013
In case of ITO Vs. Dr. Willmar Schwabe India (P) Ltd., it was held that separate invoices needs to be prepared for professional fees and reimbursement and in that case TDS in not required to be deducted on Reimbursement of exp.
In our case, client has bifurcated reimbursement charges in the same invoice and also charged service tax on the total amount including the reimbursement but didn't provide any separate invoice.
So if bifurcating the reimb. exp in the same invoice will attract TDS on total amount or only on professional fees.
17 October 2013
TDS to be deducted only on professional charges amount including service tax thereon.Ask the client not to charge service tax on amount which has been reimbursed.
17 October 2013
Dear Dileep, TDS on reimbursement is not required to be made if separate bills are raised one is for professional fee and the other is for reimbursement of expenditure . If a single bill is raised for the professional fee inclusive of reimbursement of expenditure , in such a case TDS is to be made on gross amount . The above view is supported by a case law ITO v . Dr. Willmar Schwabe ( 2005 ) 3 SOT 71 ( ITAT) . Where as per CBDT circular No . 715 dated 8-8 -1995 , TDS should be on total payment including reimbursement of expenses . But ITAT in the above decision it was held that reimbursement of expenses for which bill is separately raised did not attract the provisions of section 194 J, the above circular attracts only in case bill is raised inclusive of reimbursement of expenditure . And TDS should be deducted on the gross amount .
CAclubindia
