Tds on reimbursement of expenses

[Guest]

Dear Sir, In case contractor issues two bills seperately, one for his service charges and other is for reimbursement of expenses incurred by him. Please note contractor is charging service tax on reimbursement bills also. Question is whether the person making payment is liable to deduct TDS, u/s 194C, on reimbursement bill.

AI Summary

Confusion over TDS applicability on reimbursement bills under Section 194C; contrasting views with reference to CBDT circular and case law. A contractor issues separate bills for service charges and reimbursement of expenses, with service tax applied to both. The question is whether tax deduction at source (TDS) under Section 194C should be applied to the reimbursement bill. One response suggests that TDS should be applied to the entire payment, including the reimbursement, citing a CBDT circular. Another response indicates that under Section 194J, if a professional submits separate bills for reimbursements, TDS is not deductible, referencing a decided case.