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Can anybody clarify the doubt: Whether service tax on reimbursement of Travelling expenses to a professional is payable or not.
Hi,

The service provider often incurrs certain expenditure on behalf of the client which are termed as out of pocket expenses. These are basically the inputs which are procured by the service provider for the providng of the services. So the travelling expenses incurred on behalf of the client are liable to be charged to service tax.

However where the service provider is acting as the pure agent of the service receiver, in that case the amount of reimbursement is not to be included in the value of amount chargeable to service tax. These are the amount recovered from the client as per the business practices or the conveniences.

In case of service provider is acting as the pure agent, then the amount is not liable to service tax.

So, in your case the amount of travelling expenses paid to the professionals are liable to service tax.

However as per the provision of the Income tax act, as per section 194J if the professional is raising a seperate bill for the reimbursement of expenses, then such invoice value is not liable to TDS. However where a consolidated invoice is issued for the taxable services and the reimbursement of expenses, then TDS under section 194J will be deducted on whole os the Invoice amount.

So, for non deduction of TDS, a seperate invoice is required to be issued by the service provider.

In case of any other query, please feel free to revert.

Thanks & Regards

Rishu Gupta

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