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.

[Guest]

TDS u/s 194C is to be applied on entire payment including reimbursement bill. Refer CBDT Circular No.715 dt 8.8.1995 - Question No.30

[Guest]

For Sec 194J , if professional has submitted seperate bills / claim for reimbursement like clearkage etc., TDC i s not deductable . This is as per decided case. Manoj

AI Summary

TDS on reimbursements: contractor reimbursements form part of payment and attract deduction under section 194C. Where a contractor issues separate bills for service charges and for reimbursed expenses, the reimbursement component is treated as part of the contract payment and is subject to TDS under section 194C on the entire payment including reimbursements. By contrast, separately billed reimbursements presented by a professional may not attract TDS under the professional-fee provision (section 194J) depending on precedent and the character of the expense.