St on reimbursement of expenses

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John Philip

Trade Consultant

38 Points Posted on 03 July 2012

I am a sevice provider.

I raise invoice for 100% of my service.

Some times i pay statutory charges from y pocket like challan, fees, incidental expenses.

before 01.07.2012 this was clearly exempted from ST.

Post 01.07.2012 effec of this notification is not clear. whether service tax is applicable on reimbursement of expenses. Please advice.

Replies (3)

Ajit kumar Dubey

Taxation Manager

797 Points Posted on 03 July 2012

As per Rule 5(2) 0f Service Tax (Determination of Value) Rules, 2006, the amount of expenditure claimed as reimbursements by acting as a pure agent is excluded from the Value of the service. So, you should move ahead with the earlier practice.

CA. Jiya

Sr. Executive

49 Points Posted on 03 July 2012

Dear Ajit..

What if the Person not acting as pure agent....?

i mean......

our organisation is having some milk socities... and these socities conduct some devlopment programe...

bill is raised in our organisation's name... but we get it reimbursed from our marketing agency....

in this case is service tax applicable on reimbursement?

Ajit kumar Dubey

Taxation Manager

797 Points Posted on 03 July 2012

It will not be allowed as exemption from the value of services. It is because of the fact that invoice is not in the name of the service provider. The point of pure agent was earlier also and hence to be applied at present also.