an indian co has remittedconsultancy charges to a foreign company whose engineers had come to india

[madhavvan n]

an indian co has remittedconsultancy charges to a foreign company whose engineers had come to india for inspection and installation work at factory of indian company, there are some hotel expenses and travelling expenses which also have been reimbursed to the foreign company by the indian co. Query is the indian company required to pay service tax on both the consultancy charges paid and the expenses reimbursed to the foreign company

[Rama Krishana]

if the provisions of service tax valuation rules are considered, the situation is clear enough that the amount of expenses reimbursed to the service providers are the part of gross value of taxable services. Therefore, which paying service tax on import of services under reverse charge method, you need to include the amount of expenses reimbursed to foreign company for the purpose of payment of service tax.

AI Summary

Indian Company Must Include Reimbursed Expenses in Service Tax for Foreign Consultancy Services Under Reverse Charge Method An Indian company remitted consultancy charges to a foreign company whose engineers visited India for inspection and installation at the Indian company's factory. The Indian company also reimbursed hotel and travel expenses to the foreign company. The query raised was whether the Indian company must pay service tax on both the consultancy charges and the reimbursed expenses. The response clarified that under service tax valuation rules, reimbursed expenses are part of the gross value of taxable services. Therefore, when paying service tax on imported services under the reverse charge method, these expenses should be included.