TDS on Reimbursements made to Contractors

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Praveen Babu (Querist)
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24 June 2008 Hai friends,

If a company reimburses the contractor for the expenses incurred by the contractor and includes a service charge.

what amount is liable for tds for the bill submitted especially for REIMBURSEMENT

ex:-

actual expenses - 100(includes service
tax incurred rs.10)
service charge - 12

total - 112

vat 12

total 124

In the above case what is the amount for which tds should be deducted.

CA. Yayati Tyagi

CA. Yayati Tyagi (Expert)
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24 June 2008 in consolidated bill, tds will be deducted on full amount. better, contractor issue seperate bill for reimbursement. then no tds on that reimb. bill

Azmathullah Khan

Azmathullah Khan (Expert)
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25 June 2008 Mr. Praveen ur question is not clear. bcos, the ST will charge on service item & VAT of manufacturing or traded item. therefor no need to deduct TDS on Traded item, for which the contractor has to bill seperately.

Eg. for construction co., if appointed the contractor to supply the materials & labour.,
TDS apply only on labour+service tax u/s. 194C.

Praveen Babu

Praveen Babu (Querist)
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25 June 2008 The company has the contract with the contractor that any activity that has been made through the contractor will be reimbursed with an additional mark up amount(profit element) of some %.

the service tax and vat is just to show the example

????

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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05 April 2012 SInce the contractor has submitted a consolidated bill for his service charges and reimbursement expenses, TDS shall be deducted on the total bill amount.

Further, if service tax is charged in the invoice, then TDS shall be deducted on the total bill amount including service tax.

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