Tax on Reimbursement from Client

[Shrey Shah]

Hi, please guide on the below.

I provide IT services to a client outside India and I declare my income under Section 44ADA in my ITR.

The client asked me to purchase some assets from India like Laptop, Screen, etc. on their behalf to get the work done. They reimbursed the entire amount to me.

Although, in future, whenever the contract ends, I’ll have to return back all the assets I purchased to the client as they own it. The same clause is written in my contract as well.

In this case, do I still have to consider the reimbursed amount as an income and get it classified as taxable OR will this be a pure reimbursement and should NOT be taxable as the assets are owned by the client itself and not me?

AI Summary

Pure reimbursement not taxable: reimbursements without profit and with client ownership excluded from professional gross receipts.
Pure reimbursements received for assets purchased on a client's behalf, where ownership vests with the client and there is no profit element, are not taxable and should be excluded from gross receipts for presumptive taxation; treatment requires documentary evidence and contract terms showing client ownership and absence of markup.