TDS ON REIMBURSEMENT OF EXPENSES ??

[hardik thacker]

Sir,

our organization is autonomous body set up under special Act.

One independent association is in existing for business support activities and organizing training program for similar entities like us.

Our organization is doing payments as following to that association.

1.proportionate lump sum payment as a contribution to that association.

2.Reimbursement for Vehicle hire and accommodation arranged for our officials from third party.

The association is not keeping any profit element in its invoices but charging service tax in invoice.

Please guide me on TDS deduction from payments made as above to that association.

Thanks

[Ganeshan Kalyani]

The applicable Tds rate depends on the status of the entity. if you can mention whether your organisation is a trust of BOI or AOP the query can be replied appropriately.

[hardik thacker]

@Ganeshan sir, for income tax purpose our status is local authority.However we are falling within the definition of body corporate for service tax purpose.

[Ganeshan Kalyani]

Tds would be applicable on payment made by your entity for training activity been conducted through agency for your entity. That entity can apply to Income Tax dept for lower deduction or Nil deduction of Tds. Further there is no tds on pure reimbursement.

AI Summary

TDS on training payments applies to service consideration, while pure reimbursements are not subject to deduction; lower deduction can be sought.
TDS depends on payment nature and recipient status: pure reimbursements for third party expenses do not attract TDS, while payments that remunerate training or services provided through an agency are subject to TDS. The applicable withholding rate follows the recipient's income tax classification, and the recipient may apply to the tax department for lower or nil deduction.