whether service charge and service tax is applicable on esic reimbursment

[Pandit Bhagat]

Dear sir,

kindly confirm that whether service charge and service tax applicable on ESIC reimbursement amount from company in contractor invoice in separate bill.

[KASTURI SETHI]

Every kind of reimbursiblle is not taxable. Only that amount which has been incurred in the course of providing taxable service and is reimbursiblle is liable to Service Tax. This is as per Section 67 of the Finance Act. See the definition of 'Consideration'.

[Himansu Sekhar]

Yes, this is part of the gross value. Under a contract, contractor receives this amount and it is integrally connected with the service.

[Himansu Sekhar]

The contractor employs the people and it his responsibility for the esic deposit. It is not a pure agent reimbursement.

[KASTURI SETHI]

Sh.Himansu Sha Ji is 100 % correct on this issue.

[Himansu Sekhar]

Thank you sir

AI Summary

Service Tax Not Applicable on ESIC Reimbursements in Contractor Invoices Under Section 67 of the Finance Act. A discussion on the applicability of service charge and service tax on ESIC reimbursement in contractor invoices concluded that not all reimbursements are taxable. According to Section 67 of the Finance Act, only amounts incurred in providing taxable services are subject to service tax. One participant argued that the reimbursement forms part of the gross value and is integrally connected with the service, emphasizing that the contractor is responsible for ESIC deposits, making it not a pure agent reimbursement. Another participant agreed with this interpretation, confirming its correctness.