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

Reimbursable transport charges taxable unless pure agent - vendor must charge service tax; reverse charge not triggered.
Reimbursable transport charges are included in the consideration for a taxable service unless excluded as a pure agent under the Value Determination Rules, which require contractual appointment, separate invoice indication, recovery only of actual third party amounts, no title or use by the service provider, recipient's authorisation and liability, and that such procurements are additional to services provided on the provider's own account. Where the supplier availed the transport service, reverse charge does not apply to the purchaser; tax shortfalls from an incorrect rate are for the tax authority to address.