TDS deduction on expenses re-imbursed to professionals

Originally posted by : Ashok
	Dear Sirs,                   Kindly let me know if TDS needs to be deducted on the "Conveyance charges re-imbursed or out of pocket expenses re-imbursed  , etc. "     made to Professionals . Example : Professional Fees to Mr.A --Rs.2,00,000                   Conveyance charges reimbursed to Mr.A --Rs.50,000                   Out of Pocket expenses reimbursed to Mr.A--Rs.60,000                  In the above example should TDS be deducted 0n a)Rs.2,00,000    or    b) 2,50,000   or  c) 3,10,000                 Please reply

TDS should be on total payment including reimbursement of expenses, as per Circular No. 715 dated 8-8-1995.

However, in ITO v. Dr. Willmar Schwabe (2005) 3 SOT 71 (ITAT), it has been held that reimbursement of expenses for which bill is separately raised did not attract the provisions of section 194J.

Agreed with Deepak. 

Deduct TDS on Rs. 200,000/-

Agreed with Deepak, The Bill should be seperately raised in the name of your company. then TDS will not be deductible on the reimbursement of expense

Agree With Deepak Gupta

Originally posted by : Deepak Gupta
	TDS should be on total payment including reimbursement of expenses, as per Circular No. 715 dated 8-8-1995. However, in ITO v. Dr. Willmar Schwabe (2005) 3 SOT 71 (ITAT), it has been held that reimbursement of expenses for which bill is separately raised did not attract the provisions of section 194J.

Question No.30 in the Circular No. 715 dated August 8, 1995 answers reader's query as under:

"Question No.30: Whether the deduction of tax at source under Sections 194-C and 194-J has to be made out of the gross amount of the bill including reimbursements or excluding reimbursement for actual expenses?

Answer: Sections 194-C and 194-J refer to any sum paid. Obviously, reimbursements cannot be deducted out of the bill amount for the purpose of tax deduction at source.

https://law.incometaxindia.gov.in/DitTaxmann/IncomeTaxActs/2008ITAct/cirsec194C.htm

If the pocket expenses claimed through separate invoice than TDS deduction can aviod, else as above as per curcular 715  08/08/1995, any sum paid to cnsultants through consloidated invoice

What if Professional is charging service tax on Reimbursement Expenses.