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 valuation treats reimbursements as part of taxable value unless pure agent exception applies. Expenses incurred in the course of providing the output service are included in the taxable value for charging service tax; reimbursements form part of consideration and are taxable unless the provider qualifies as a pure agent, in which case amounts paid on behalf of the service recipient may be excluded.