Expenditure

[MITSUI PRIME ADVANCED]

 

Dear Sir

 

Please provide your valuable suggestion in the case of RCM ( Reverse Charge Mechanism) We have properly deposit service tax under RCM service received from outside of India territory  related to Engineering services.

one person was come  from japan to India we have arrange air ticket and hotel for around 75 day's, Service tax department  issue a notice under demand of service tax on  expenditure born by company by way of hotel air, and refreshment expenses of one person from japan.

So in this case Service tax applicable  on Expenditure ( air, hotel , refreshment ) born by company ,

 

please provide your advice urgently

Regards

Arjun Sachdeva

 

[YAGAY andSUN]

Yes, you would have to pay the service tax under RCM on the gross amount (expenses) incurred by you on such transactions.

[dipsang vadhel]

I agree with Mr. pradeep khatri.

AI Summary

Reverse Charge Mechanism applies to company borne travel and hospitality expenses for foreign service providers; tax liability on gross expenditure. When a resident company procures taxable services from abroad and bears travel, accommodation and hospitality expenses for the foreign service provider, those company borne expenditures are treated as consideration and attract service tax under the Reverse Charge Mechanism, with liability to be discharged by the company on the gross amount of such expenditures.