Reimbursement of Transport Charges

[Gurmeet Singh Rohra]

Hi Team,

We have got a reimbursement invoice from our vendor, who is actually supplier of capital items, for transportation charges & vendor has charged us service tax@7%, [email protected]% & [email protected]%.

Along with the reimbursement invoice, vendor has provided us transporters bill as well. Given below is the calculation for your reference:

Transporter Invoice :

Total Charges - ₹ 7981.30 (incl of service tax)

Reimbursement Invoice charged by Vendor:

Reimbursement - ₹ 7981.30

Service Tax@7% - ₹ 558.69

[email protected]% - ₹ 19.95

[email protected]% - ₹ 19.95

Total - ₹ 8580.00

Query:

1. Please confirm whether vendor should charge service tax in this given case

2. If yes, whether the calculation above is correct & whether we have to pay the balance to government treasury under RCM-GTA (Please provide relevant notification / circular)

Regards,

Gurmeet

AI Summary

Vendor Misapplies Service Tax: Correct Rate is 15%, Not 7%, on Reimbursement Invoice for Transportation. A vendor charged service tax on a reimbursement invoice for transportation, prompting a query about the correctness of this charge and the applicable rate. The vendor applied service tax at 7%, SBA at 0.25%, and KKA at 0.25%, totaling 8580.00. Respondents clarified that reimbursable expenses fall under the service tax net, but the vendor's rate was incorrect, as it should be 15%. Reverse charge mechanism doesn't apply since the service was availed by the supplier, not the recipient. Conditions for excluding reimbursable expenses from taxable value were also outlined.