Service tax on reimbursement

2751 views 5 replies

NITHYA

ARTICLE

38 Points Joined November 2007

The point for consideration is regarding

reimbursement of telephone expenses to staff ,which

include an element of Service Tax. The reimbursement

is either the actual amount or the prescribed amount

whichever is lower. Though the telephones may be in

the name of respective employee, since the expenses

are borne by the Company it has to be ascertained

whether the company is entitled to take Service Tax

Input Credit on such

reimbursements.

Replies (5)

G Teja

Partner

49 Points Joined November 2007

dear nithya, you can't avail Service Tax input on reimbersment expense. That too telephone numbers are not register in the name of company.

shyam kishor porwal

Chartered Accountant

183 Points Joined November 2007

Dear Nithya, you can avil input credit on service tax paid on reimbursement of phone bill if this is only utilised for official purpose or providing outout service. Regestration is not important.

NITHYA

ARTICLE

38 Points Joined November 2007

hi Teja, My doubt is these expenses are indirectly charged as telephone expense by the company, then why cant they avail the benefit of service tax as input credit. Yes ,ofcourse ownership is different.....

Rama Mohan Panyam

Manager- Finance

22 Points Joined January 2009

We are getting reimbursement from our clients for the telephones used for them. This reimbursement we are getting through Debit Notes. Since the service tax is already paid by us on telephone bills, will this reimbursement of telephone bills attract the service tax again ?

OFFICESELVA

Service

515 Points Joined October 2007

Are you availing Cenvat credit on telehphone charges in the first place? Further, two service activities take place here. (a) Service provided by Telephone company to you. And you have paid service tax on entire value(bill) raised by the telecom. There are no issues.

(b) Service rendered by you to your clients. On the amount charged/recived by you Service Tax paid. Further, you are receiving an additional amount by way of debit notes. This value should also form part of gross value of income charged and SERVICE TAX SHOULD BE PAID on this reimbursable expenditure WITH EFFECT FROM 18/04/2006 AS PER VALUATION RULES.