Service tax on Reimbursement of Expenses to parent company

[Yatin Bhopi]

We are the subsidiary of parent company, who is located outside India . The parent company has appointed overseas consultant for our work, to whom they have paid for their servies & now asked reimbursement from us.( assuming the service we availed is a taxable service).

Reimbursement in the above case will attract service tax? if yes, under which category we should pay the service tax? Further are we suppose to add the category of services in our service tax registration certificate? 

[Rahul Sonawane]

Yes this will attract service tax under reverse charge module.

The category of service depends on what kind of service you have received.

 

AI Summary

Reverse charge applies to reimbursements for taxable services paid to overseas agents; classification depends on service nature. Reimbursement of payments by an Indian subsidiary to its foreign parent for taxable services obtained by the parent from an overseas consultant attracts service tax under the reverse charge mechanism; the applicable service category depends on the nature of the service received.