Re: Reimbursement of Actual Expenses

[PONNADA B K RAVIKUMAR]

Dear Sir, We have entered the Manpower contract , in that reimbursement of actual Expenses incurred by Manpower contract , whether in this case service tax is attracted or not, since it is purely a reimbursement of acutal expenses. Hope it is clear.

[Rajeev Kalra]

Dear Ponnada,

as per service tax valuation rules, all expenses whether it is actual or otherwise , incurred in the course of providing the output service shall be included in the value for the purpose of charging service tax .

if service provider is "PURE AGENT " of service receiver then only the expenses incurred on behalf of service receiver will not be included in the value  for the purpose of charging service tax. 

 

AI Summary

Service Tax Applies to All Expenses in Manpower Contracts Unless Provider Is a 'Pure Agent' Under Valuation Rules. A query was raised regarding whether service tax applies to the reimbursement of actual expenses under a manpower contract. The response clarified that, according to service tax valuation rules, all expenses incurred in providing a service, whether actual or otherwise, should be included in the taxable value. However, if the service provider acts as a 'pure agent' of the service receiver, expenses incurred on behalf of the service receiver are not included in the taxable value.