Service Tax applicability on reimbursement of foreign expenses

[Asked by Guest]

X Co. (Based in Hongkong) is exploring market in Hongkong for Y Co(An Indian Co.). For this services X Co. has deputed thier one employee. Y Co. has to reimburse salary, TA/DA and travelling exp. of that employee of X Co. Is service tax is payble by Y Co. on amount reimbursed to X Co.

AI Summary

Service tax on reimbursements depends on whether the principal service is taxable and where it is provided.
Service tax on reimbursements depends on whether the underlying activity is taxable and where the service is provided: reimbursements alone are not taxable if the principal service is not taxable, but if the principal service or a specified taxable category applies-such as business auxiliary services or imported services-reimbursements may be included in the taxable value; salary itself is not a service but reimbursements tied to a taxable service can attract service tax.