Reimbursement of expenses Import of Service- Service tax chargeability

[Guest]

Dear Sir,

Is Service tax chargeable on reimbursement of expenses in case of import of Service. Service such as a video conference was held in the Ho office of Mumbai and for the authority for SYSTEM USAGE CHGS-VIDEO CONFERENCE SYSTEM WITH our Parent company (Japan) charges were paid. Please explain regarding this, Pls give any reference regarding this. Thanks and regards.

[YAGAY andSUN]

Yes, from this budget reimbursement of expenses would be added in the taxable amount to calculate and payment of service tax.

[Manoj Agarwal]

The Valuation rules are same for import of service and domestic services. The proposed amendment in section 67 of the Finance Act has the effect of nullifying the Delhi High Court judgment in the case of Intercontinental Consultants and Technocrats which held in favor of assessee regarding reimbursement of expenses.

So, after the Finance Bill 2015 is enacted by the assent of the President, reimbursements except as 'PURE AGENT' shall be chargeable to service tax.

AI Summary

Service tax applies to expense reimbursements for imported services, including video conferencing, except for 'pure agent' reimbursements per Finance Bill 2015. A query was raised regarding the chargeability of service tax on the reimbursement of expenses for imported services, specifically for a video conference service used by a company in Mumbai with its parent company in Japan. Two replies were provided. The first response indicated that reimbursements would be included in the taxable amount for service tax. The second response noted that the valuation rules for imported and domestic services are the same, and a proposed amendment to the Finance Act would make reimbursements, except those made by a 'pure agent,' subject to service tax following the Finance Bill 2015.