Audit EA 2000

[anand shah]

Dear Team,

We are service provider having Pvt Ltd. Company and providing House-keeping , Manpower (Skilled /Unskilled) Services to Corporate Property and Residence.

I need some advice from your expertise that we are collecting a part of Reimbursement payment through Debit Note from our client like P.F & E.s.i.c Contribution , Consumable Materials, Travelling / transportation & Employees Uniform charges. We are not collecting Service tax on the above mentioned Expenses as well as No Agency charges etc.

In this regards we need to know whether the above is Included in Taxable services or not ?

Please Advice and provide your suggestions .

[Himansu Sekhar]

The reimbursible expenses are to be added to the taxable value and subject to service tax. Explanation to sec 67 of the finance Act,1994 clarified the taxability of the reimbursible expenses. Hon'ble Supreme Court has also gave the verdict in this regard.

[KASTURI SETHI]

As per Section 67 of the Finance Act, Service Tax is to be charged on gross amount charged and also see the definition of 'consideration' provided in Explanation below sub-section 4 of section 67

Consideration

(ii) any reimbursable expenditure or cost incurred by the service provider and charged, in the course of providing or agreeing to provide a taxable service, except in such circumstances, and subject to such conditions, as may be prescribed;

No deduction is allowed. Though you have not collected Service Tax on the expenses/charges, yet Service Tax is required to be paid. Vide Notification No.7/15-ST dated 1.3.15 (effective from 1.4.15) amending Notification No.30/12-ST dated 20.6.12 (effective from 1.7.12) 100% Service Tax on Manpower Supply was required to be paid by Service Receiver under RCM subject to conditions.

[Ganeshan Kalyani]

Even in GST, the amounts are to be included .

AI Summary

Service Provider's Reimbursable Expenses Subject to Tax Under Section 67 of Finance Act, 1994; Supreme Court Confirms A service provider company inquired about the taxability of reimbursable expenses such as P.F & E.S.I.C contributions, consumables, travel, and uniform charges, collected via debit notes but not subjected to service tax. Responses clarified that under Section 67 of the Finance Act, 1994, such expenses should be included in the taxable value and are subject to service tax. The Supreme Court has upheld this interpretation. Furthermore, under GST, these amounts are also included in the taxable value. Notifications specify that 100% service tax on manpower supply is payable by the service receiver under the reverse charge mechanism.