Registration category - taxability of reimbursement of expenses

[Guest]

Dear Sir, We have recently formed a company for activity of Biotechnology Research and Development , Please advise under which category do we need registration. This Indian Co will be later on become 100% subsidiary of US Company by way in FDI , we have been asked by US company to rase bill on them towards monthly administrative charges which includes rent to be paid, other consultancy charges etc incurred in india and they will reimburse the same to us. I had 2 queries in this regards :1 1)Under what head for registration will this invoice for reimbursement of admin expenses incurred by us from US Co. 2)Will this be taxable unser service tax as it seems to be reimbursement of expense. 3) If it comes under service Tax Bracket will it arrract service tax . Thanks and Regards Prashant Bhole

[Guest]

Category of services can be determined only after detailed analysis of the nature of service mentioned in the query. However, if you are not providing any service to your parent company and getting reimbursement of expenses incurred on behalf of your parent company, the same would not be chargeable to service tax. But, what is reimbursement and what is not this is the matter of facts and circumstances.

[Guest]

Respected Sir, My querry is that is the institution opened by an educational society liable to give service tax to the government or not Regards Pankaj

AI Summary

Reimbursement of expenses may not attract service tax if merely reimbursing costs and not providing an independent service. Whether invoices for administrative charges billed to a foreign parent are taxable depends on substance: pure reimbursements of expenses incurred on behalf of the parent are not chargeable to service tax, but distinguishing reimbursement from taxable consideration is fact specific and requires analysis of contract terms, mark ups, and whether the Indian entity provides independent services or acts as principal versus agent.