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

Import of services: include reimbursed travel and hotel expenses in taxable value under reverse charge for service tax. Reimbursed outlays paid to the foreign service provider constitute part of the gross value of the taxable service; therefore, when service tax on imported services is payable under the reverse charge mechanism, the Indian recipient must include reimbursed travel and hotel expenses in the taxable value and pay service tax on them.