I have an invoice of a vendor who is providing the Management Consultancy and he raised the saprate invoice for out of pocket expense and charge the service tax @ 10.3% in invoice also.So i am confuse that Tds should be deduct on that invocie or not ? ? ? If "Yes" then under which section ? ?
TDS u/s 194J will be applicable to any payment made for professional services. It is a common practice to invoice differently for professional charges and reimbursments. Service Tax will be levied even for the protion of reimbursments.You have to deduct TDS @ 10% if the limits mentioned u/s 194J are crossed. For limits please refer 194J.
No need to deduct TDS on expense re-imbursement, as it is not his income.
This view was taken in a decided case of Wilmar Schwabe.... pls google search 194J and Dr. Wilmar Schwabe.
Question 30 : Whether the deduction of tax at source under sections 194C and 194J has to be made out of the gross amount of the bill including reimbursements or excluding reimbursement for actual expenses ?
Answer : Sections 194C and 194J refer to any sum paid. Obviously, reimbursements cannot be deducted out of the bill amount for the purpose of tax deduction at source.
Circular : No. 715, dated 8-8-1995.
So if billed seperately no need to deduct TDS. Otherwise you need to deduct if billed in one bill only.
Thanks .g.k.
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