Service tax on reimbursement of expenses

Yes, Service Tax is applicable on all reimbursements. The only exception is as prescribed in rule 5 of Service Tax (Determination of value) rules, 2006 where in if the reimbursement is in the nature of pure agent then the same is not liable for service tax. Meaning of the term pure agent is prescribed in the said rule. Hope i'm clear.

Regards,

Ravi Kumar Somani

As per the changes made in Finance Act 2016 as mentioned by you also consideration includes all types of reimbursements which are incurred in the course of providing service are to be included in the valuation of service except in case of expenditure incurred as pure agent provided you satisfied the condition as laid down in Rule-5 of valuaiton rules. 

Basically amendment in the definition of Consioderation made to override the law verdict by DHC in case of  Intercontinental Consultants and Technocrats Pvt. Ltd where in honable high court said that "it is only the value of taxable service that can be brought to charge of service tax and nothing more.

Before the amendment it was always be the matter of litigation whether to include such expense or not to include.

But now the law is clear consideration includes all types of reimbursable expenses.

Regards 

Sunil Kumar