Tds on reimbursement of charges
ashok thakker
(Querist) 14 May 2013
This query is : Resolved
Sir,
We have been receiving a part of electric charges from our clients as reimbursement against debit notes raised.
Now, this year one of the clients insist on deduction of TDS on this amount,whereas all past years they never deducted.
Pl advise if it is deductible receipt.
regards,
ashok thakker
Ganesh babu
(Expert) 14 May 2013
1)Tax is deduct able only in respect of payment of income or other sum consisting an element of income,
2)re-imbursement expence doesnot partake in the nature of income in the hands of payee of such expences
in view of above reasons tds cannot be done if payment is relating to re-imbursement of expences
But bill inrespect of expences required to be re-imbursed should be separetely raised on the payer there of..
in your case we can say re-imbursement expences are also included in gross bill so tds can be deducted..
ashok thakker
(Querist) 14 May 2013
Thanks a lot sir,
regards,
ashok thakker
Ganesh babu
(Expert) 14 May 2013
welcome,
for your reference please refer my article which may be helpful to you
http://www.caclubindia.com/articles/inclusion-of-transporters-details-in-tds-returns-are-mandatory-17543.asp
KUMAR JAGADEESAN
(Expert) 15 May 2013
Dear Mr.Thakker/Shri.Ganesh Babu
The queriest has not mentioned the nature of services/ work on which TDS is deductible by his client. in case of 194C - payment to contractors the operative word is "payment of any sum" and hence TDS has to be deducted on all payments including reimbursement. So is the case with Sec.194J and hence in my opinion TDS has to be deducted .
Whether the claim is made as part of single bill or claimed separately in my opinion does not matter.
J.Kumar
Advocate
ashok thakker
(Querist) 15 May 2013
Sir,
For clarification these are the reimbursement of electricity charges fixes with them @Rs.1500/- per month,irrespective of actual CESC bills to us.
regards,
ashok thakker
KUMAR JAGADEESAN
(Expert) 15 May 2013
Dear Thakker
I still do not understand your query. What is the nature of reimbursement. Is it only a reimbursement under any contract say -Rental agreemnt or you also get in addition to the above any other remuneration ( fees, service charges etc).
Pl.clarify
J.KUMAR
Advocate
Ganesh babu
(Expert) 15 May 2013
dear kumar sir..
even my opinion also tds to be deducted only..whihc i have been clarified in my last point of my reply earlier
however as per CBDT Circular No.715, dated 8.8.1995 it was clearly given that if re-imbursement of expences are also included in gross amount of bill tds to be deducted where as if seperate bill raised for re-imbursement of expences tds .not applicable
but in general to apply tds,
In order to address the issue whether tax is required to be deducted at source, in respect of
reimbursement of expenses, it will be necessary to keep in mind the following two aspects, viz :
(i) Tax is deductible at source under Chapter XVII-B of the Act, only in respect of payment of income
or other sum made by the person responsible for such payment, viz. tax-deductor to other person
being the tax-deductee, and
(ii) Reimbursement of expenses does not partake the nature of income in the hands of the payee of
such expenses
it may be any sum but we cannot deduct tds on re-imbursement expences as it is not partake income in the hands of person as explianned above provided they have to give separate bill for re-imbursement of expences
ashok thakker
(Querist) 15 May 2013
Thanks,sir Ganesh babu,
regards,
ashok thakker
