Tds on reimbursement of expenses

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

Replies (8)

TDS should not  be deducted for any Re-imbursement made

agree with above

TDS is not applicable for re-imbursement of expenses. 

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

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.

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

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

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.

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.

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