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Service tax on reimbursement
We, the Pvt Ltd company (supplier of decorative, indoor, outdoor light fittings) taken Farm House on lease for display of Goods and other business activities. We also sub-lease the same Farm House to Third Party and reimburse the expenses from Third party in following manner:
1) Lease Rent : 50%
2) Electricity Bill : 50%
3) Telephone & Internet : 50%
4) Security Charges : 50%
5) Common Staff Salary : 50%
Now please advise us, whether Service Tax is applicable on above reimbursement?
Replies (3)
As per the definition, consideration inter alia includes reimbursement. Hence ST is applicable on reimbursement too.
Thanks to reply. Is it applicable on reim of 50% electricity and Telephone Exp? Whether this exp covered under Pure Agent? Please reply
If such expenses are incurred in the capacity of pure agent (meaning given below), then ST is not applicable on such reimbursements. But this doesn't seem to be pure agent services and hence I think ST is applicable.
Pure agent: A person who
- enters into a contractual agreement with SR to act as his pure agent to incur expenditure/costs in the course of providing taxable services
- neither intends to hold nor holds any title to goods/services so procured/provided
- does not use such goods/services so procured
- receives only the actual amount incurred to procure such goods/services
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