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

Taxability of reimbursed ESIC contributions: reimbursements integral to the service form part of the contractor's taxable gross value.
Whether service tax applies to reimbursed employer statutory contributions depends on whether the reimbursement is incurred in the course of providing the taxable service and constitutes consideration; where the contractor employs staff and bears statutory obligations, ESIC reimbursements are integrally connected with the service and form part of the contractor's gross value rather than qualifying as a pure agent exclusion.