TDS on reimbursment of expenses

[venkatesh B]

Please provide whether TDS to be deducted or not in following cases

1.In a contract Expenses are Reimbursed Without Separate Bill

2.In a contract Expenses are Reimbursed with Separate Bills

3.For a Professional Service, Expenses are Reimbursed Without Separate Bill

4.For a Professional Service, Expenses are Reimbursed With Separate Bill.

[Ganeshan Kalyani]

1 & 3. Tds will be deducted on entire amount. 2 & 4 Tds will be deducted on bill amount and reimbursement is not liable for tds subject to supporting documents are available. Further they are case laws which supports that TDS should not be deducted on reimbursement portion provided the amount does not have any profit element.

[DR.MARIAPPAN GOVINDARAJAN]

Reimbursement of expenses are not liable to TDS, in my view also.

AI Summary

TDS on reimbursements: documentation and absence of profit determine withholding on expense recharges.
Whether TDS is deductible on reimbursed expenses turns on whether reimbursements are supported by separate bills and documentation and whether they include a profit element; unsupported reimbursements are treated as part of taxable payment, while documented reimbursements without profit may be excluded from TDS withholding, though an opposing view treats reimbursements generally as not liable to TDS.