In case a consultant raises a bill say for Rs.3000 (his professional fees). And he claims reimbursement (out of pocket expenses) which he did not include in the bill.
On what amount TDS should be deducted??
On the bill amt or on the total amount payable to him??
on the amount mentioned in the bill raised by him.
TDS is applicalbe only Professional fee and other reimbursement or outof pocket exp. is not comes under TDS.
If separate bill raised for Fees & expenses then TDS should be deducted on fees only. But Service tax is applicable for both.
it is clarified by CBDT circular that TDS is deductible on total payment
What Subash Srinivas Posted is 100% correct
TDS SHOULD BE DEDUCTED ON BILL AMOUNT OF RS. 3000/- ONLY & TDS WILL BE DEDUCTED ONLY WHEN THE PAYMENT MADE TO PROFESSIONAL IS MORE THAN RS. 20000/- IN A WHOLE YEAR
If a seperate bill is issued for reimbursement, no TDS will be deducted. However if the amount of reimbursement is in the same bill, TDS has to be deducted on the Gross Amount i.e including TDS
The words used in Sec 194J are "any sum paid " , so i guess tds is also applicable on reimbursements . Clarification is provided by the board
tds should be deducted on bill amount but it is to be deducted only if the single payment exceeds Rs 20000/- or the annual overall payment exceeds Rs 50000/-
Pls refer circular no 715 dtd 08.08.95
It says that reimbursement cannot be deducted out of the bill amount for the purpose of calculating TDS portion.
Pls refer to the link for clarity
https://law.incometaxindia.gov.in/Directtaxlaws/act2005/Sec_194C.htm
mother of all circulars 715
30. Whether the deduction of tax at source under sections 194C and 194J has to be made out of the gross amount of the bill including reimbursements or excluding reimbursement for actual expenses ?
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