Tds u/s 194j on reimbirsement of govt fees paid by firm
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
05 September 2016
Dear Experts,
If any firm pay the Govt fees on the behalf of Clients and charge same in Invoice raised with professional service charge. then is client liable to deduct the TDS on reimbursement charges too.
Thanks
If any firm pay the Govt fees on the behalf of Clients and charge same in Invoice raised with professional service charge. then is client liable to deduct the TDS on reimbursement charges too.
Thanks
Expert : Anonymous
Expert :
Anonymous
(Expert)
05 September 2016
could you please clarify what is the nature of government fee?
05 September 2016
TDS payment on behalf of clients, trade mark registration fee
02 August 2025
Great question — this is a **common situation** in professional services and compliance support.
Let’s go over it carefully:
---
## ✅ **Scenario:**
* A **firm (say, a CA, CS, or legal firm)** pays **Government fees** on behalf of a client (e.g., **TDS challans**, **trademark registration fees**, etc.).
* These amounts are then **invoiced to the client** as a **reimbursement**, along with **professional service charges**.
* The query is: **Should the client deduct TDS u/s 194J on the reimbursement portion too?**
---
## 🧾 **Rule under Section 194J:**
Section 194J requires TDS @ 10% to be deducted on payments to professionals **for rendering professional or technical services**.
---
## 🔍 **Key Factor: Is the reimbursement part a pure reimbursement or part of composite fee?**
### 🔸 If **pure reimbursement** (with supporting bills/receipts):
* **NO TDS on reimbursement** portion
* **TDS only on professional fee**
🔹 E.g., Firm pays ₹9,000 for trademark registration and charges ₹1,000 as professional fee →
→ **TDS @10% only on ₹1,000**
But this is only valid if:
* The govt fee is **separately identifiable**
* Proper **evidence** (challan, receipt, govt acknowledgment) is attached
* Agreement/engagement letter clearly allows reimbursement
---
### 🔸 If the reimbursement is **not clearly segregated**, or is part of a **composite invoice**:
* Then **TDS is applicable on the entire amount**, including reimbursement.
CBDT Circular No. **715 dated 8 Aug 1995**, Q.30:
> If the bills are **composite**, and do not indicate separately the reimbursement component, **TDS is to be deducted on the whole amount**.
---
## ✅ **Conclusion:**
| Situation | TDS u/s 194J on reimbursement? |
| -------------------------------------------------------------------------------- | ------------------------------ |
| Govt fee clearly **separately mentioned** in invoice & supported by evidence | ❌ **No TDS** |
| Govt fee is **included in one consolidated invoice** or not supported separately | ✅ **TDS on full amount** |
---
## 📌 Your case — Trademark registration fees:
* If the firm pays **actual trademark fees** (₹4,500, say) to the Controller General of Patents and then charges that **with proof**, and **separately shows it** in invoice, then:
✅ No TDS on ₹4,500
✅ TDS only on the service fee portion (say, ₹1,500)
---
Let me know if you'd like a sample invoice format showing **separate reimbursement and professional fee** — which can help avoid unnecessary TDS disputes.
Let’s go over it carefully:
---
## ✅ **Scenario:**
* A **firm (say, a CA, CS, or legal firm)** pays **Government fees** on behalf of a client (e.g., **TDS challans**, **trademark registration fees**, etc.).
* These amounts are then **invoiced to the client** as a **reimbursement**, along with **professional service charges**.
* The query is: **Should the client deduct TDS u/s 194J on the reimbursement portion too?**
---
## 🧾 **Rule under Section 194J:**
Section 194J requires TDS @ 10% to be deducted on payments to professionals **for rendering professional or technical services**.
---
## 🔍 **Key Factor: Is the reimbursement part a pure reimbursement or part of composite fee?**
### 🔸 If **pure reimbursement** (with supporting bills/receipts):
* **NO TDS on reimbursement** portion
* **TDS only on professional fee**
🔹 E.g., Firm pays ₹9,000 for trademark registration and charges ₹1,000 as professional fee →
→ **TDS @10% only on ₹1,000**
But this is only valid if:
* The govt fee is **separately identifiable**
* Proper **evidence** (challan, receipt, govt acknowledgment) is attached
* Agreement/engagement letter clearly allows reimbursement
---
### 🔸 If the reimbursement is **not clearly segregated**, or is part of a **composite invoice**:
* Then **TDS is applicable on the entire amount**, including reimbursement.
CBDT Circular No. **715 dated 8 Aug 1995**, Q.30:
> If the bills are **composite**, and do not indicate separately the reimbursement component, **TDS is to be deducted on the whole amount**.
---
## ✅ **Conclusion:**
| Situation | TDS u/s 194J on reimbursement? |
| -------------------------------------------------------------------------------- | ------------------------------ |
| Govt fee clearly **separately mentioned** in invoice & supported by evidence | ❌ **No TDS** |
| Govt fee is **included in one consolidated invoice** or not supported separately | ✅ **TDS on full amount** |
---
## 📌 Your case — Trademark registration fees:
* If the firm pays **actual trademark fees** (₹4,500, say) to the Controller General of Patents and then charges that **with proof**, and **separately shows it** in invoice, then:
✅ No TDS on ₹4,500
✅ TDS only on the service fee portion (say, ₹1,500)
---
Let me know if you'd like a sample invoice format showing **separate reimbursement and professional fee** — which can help avoid unnecessary TDS disputes.
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