Friends,
Our travel agent billed us 1,000 plus service tax say 120 = 1,120/- for visiting our client's place. As per contract with our client they would reimburse us travelling expenses.
Now, should we charge service tax @ 12.36% on 1,120 while sending our invoice to them. In this matter, i wish to inform that whether service tax is to be charged on reimbursement is a matter of debate. Rule 5 of Valuation Rules 2006 clearly specify whe to charge tax and when not to. Our client argues as the atrvel cost of Rs 1,000 has already suffered service tax the same should not suffer again.
Regards,
CAclubindia
