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Q. > Please Help: reiumbursement of exoenses with service tax
Suppose we have incurred Rs 100/- on Hotel Bill / Payment to Travel Agency . Further you Know the Train ticked AC includes also service tax element . we incurred service tax @ 5 % , than our out of pocket expenses is Rs 105 . The Expenditure is reiumbursable by client we raised on bill of Rs 117.97 ( 105+12.36 % service Tax ), the client refuse to pay service tax my query is 1) Rs 5/- is our service tax input or not ii) we have to raised bill for Rs 112.36 or 117.97 iii) if client is paid 117.97 it means they paid rs 17.97 as service tax means service tax on service tax also please explain with example , supporting provision , supporting evidences
answered Oct 07, 2013 by shankygarg , Karnal
AS PER NEW SERVICE TAX RULES, SERVICE TAX SHOULD BE CHARGED ON "OUT OF POCKET EXPENSES".SO, SERVICE TAX WILL BE SURELY CHARGED.
1) YES, RS.5 IS YOUR INPUT TAX.
2) YOU SHOULD RAISE BILL FOR RS. 117.97.
3) IF YOUR CLIENT PAYS RS. 117.97, IT DOES NOT MEAN THAT THEY PAID RS.17.97 AS SERVICE TAX. SERVICE TAX OF RS.5, paid by you, IS PART OF THEIR COST FOR THE SERVICE.
answered Oct 07, 2013 by shankygarg , Karnal
AS PER NEW SERVICE TAX RULES, SERVICE TAX SHOULD BE CHARGED ON "OUT OF POCKET EXPENSES".SO, SERVICE TAX WILL BE SURELY CHARGED.
1) YES, RS.5 IS YOUR INPUT TAX.
2) YOU SHOULD RAISE BILL FOR RS. 117.97.
3) IF YOUR CLIENT PAYS RS. 117.97, IT DOES NOT MEAN THAT THEY PAID RS.17.97 AS SERVICE TAX. SERVICE TAX OF RS.5, paid by you, IS PART OF THEIR COST FOR THE SERVICE.
Experts Panelist
Comments
Aseem Rana
09-Oct-2013 , 12:31:59 pmAlthough Rule 5(1) of Service Tax rules says that: Where any expenditure or costs are incurred by the service provider in the course of providing taxable service, all such expenditure or costs shall be treated as consideration for the taxable service provided or to be provided. But there are many rulings which says that service tax is not chargeable on expenses reimbursed. For this, contractual relationship has to been seen between service provider and receiver, if the responsibility for payment of travelling expenses lies with receiver, than no service tax is leviable on reimbursement but if travelling expenses are liability of Service provider and incurred incidental to provision of service than service tax is chargeable and in your case it is chargeable on Rs.100 as you are taking Rs.5 as Input credit.
PRAKASH KUMAR SINGH
09-Oct-2013 , 11:18:32 pmYou should raise a bill of Rs 117.97 & Rs 5 is your Service tax input.