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Tds on reimbursement of expenses

Phalgun (Audit Manager) (327 Points)

01 November 2012

Hi ,

Kindly answer this .

Should TDS be deducted for remittances made towards membership fee & annual fee or travelling expenses to a non resident residing in Britain ? for 15CB purposes

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8 Replies

(Guest)

TDS should not be deducted for any Re-imbursement made

valji (Accounts manager-MBA) (2150 Points)
Replied 01 November 2012

agree with above

(Guest)

TDS is not applicable for re-imbursement of expenses.

But you have to file Form 15CB for the foreign remittance with TDS as 'nil'

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 01 November 2012

TDS can not be avoided, incidence of such expenditure when comes to company knowledge and is deemed to be paid / debited is the right situation for deduction purpose.

Yogesh Kumar (Job) (180 Points)
Replied 01 November 2012

if a person is coming to India from outside India for providing any service then reimbursements towards the staying expenes, travelling and other expenses will itself become the part of the paymnet toward the payment made of services, so TDS should be decuted.

So TDS has to be deduced under section 195

Giya (aritcles) (107 Points)
Replied 01 November 2012

TDS is not applicable for reimbursements...it is applicable only when a payment is made..

Yogesh Kumar (Job) (180 Points)
Replied 01 November 2012

Please read the judgement and the same decision has been applied on the many other cases.

Logic behind this is, the assessee can route even the payment of services recieved though reimbursement to avoid the tax implication.

Attached File : 254060 1079217 csc technology singapore pte ltd singapore vs adit itat delhi .pdf downloaded: 371 times

Yogesh Kumar (Job) (180 Points)
Replied 01 November 2012

In continuation to my previous reply there sum cases where authorities do agree that reimbursement do not contain any profit element so can not be taxed.

NathpaJhakri Joint Venture
(2010) 41 DTR 23(Mum.) (Trib.)

As the reimbursement of expenses is not taxable in the hands of non-resident payee, there is no need for assessee to deduct TDS and he cannot be held to be assessee in default, consequently no disallowance under section 40(a)(i) is called for.

So upto my understanding if the service provider is a related party in any manner then you must deduct TDS else you can make reimbursement payment without TDS.

But till date it is a litigative matter.