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TDS on Reimbursement

sumeet (service) (46 Points)

06 February 2008

We are importing materials from overseas and pay the octroi on the same. We have appointed Agent for this who pays the octroi amount and charged service amount for his services. He gives us full bill including Octroi amount which we reimbursed him on the next day. My question is whether TDS is applicable on full amount including Octroi or on service charges only.

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12 Replies

O.D.SHARMA (DGM-F & A) (1734 Points)
Replied 06 February 2008

yes,If the bill is consolidated then on full value TDS is applicable

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M.Sriram Shenoy (CA Final) (814 Points)
Replied 06 February 2008

Tax has to be deducted on the whole amount of bill, if the bill doesnot contain any segregation between reimbursements and service charges.

sumeet (service) (46 Points)
Replied 06 February 2008

If we take two different bills (1 for Octroi amoutn and 2 for Service Charge ) from the Agent then what will be implication of TDS.

(Guest)

If separate bills are received then TDS will be applicable only on service charges. no tds on reimbursements

M.Sriram Shenoy (CA Final) (814 Points)
Replied 06 February 2008

If two bills are available separating the reimbursement and service charge amounts, then TDS will be applicable only for service charges.

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(Guest)

Can you give me any circular or any other reference to substantiate that tax need not be deducted on reimbursements.

M.Sriram Shenoy (CA Final) (814 Points)
Replied 12 February 2008

Ms. Abinaya, I can give you a circular, which says that TDS has to be deducted on reimbursements. It is Q. no 30, Circular No.715 dated 1995.(If i am not wrong).

deepak thukral (consultancy) (45 Points)
Replied 03 June 2008

The answer is very simple. The person appointed for the purpose of discharging the liability of octoria is expected to provide the receipt for payment thereof. Then no TDS will be deducted on that amount. In theabsence of proof of payment, the full amount will be liable to TDS.

Nidhi Mittal (C.A.,C.S.) (107 Points)
Replied 18 March 2009

Plz tell mewhether tds wiil b applicable on reimbursement to employyes

O.D.SHARMA (DGM-F & A) (1734 Points)
Replied 18 March 2009

Dear,It depends the nature of reiumbersement. if Its Exp. for company or personnel exp. reiumbersment in medical/Conveyance ETC is taxable,others are not.