Service tax on reimbursement claims

[bala]

Sir,

If a consultant claims his travel expenses along with necessary bills,
should that also to be service taxed. (Whether he has to raise
service tax for that also?). Can you please clarrify with necessary
quotes.

regards
bala

[Divakar]

If travelling expenses are billed then it is taxable otherwise you are
not supposed to pay service tax on that.
Regards

[Divakar]

Reimbursement of Expenses
Fundamentally, reimbursement of expenses cannot be considered as a
business receipt and incurring expenses on behalf of the client does
not and cannot involve any rendering of service by any stretch of
interpretation. The valuation rules on reimbursement are biased in
favour of revenue (without any logic) and the definition of pure agent
is such that it allows double taxation in genuine cases too.

For example, if a consultant books his air ticket through travel agent
for Rs 10,000 and pays Rs 60 as service tax (@0.60 per cent) to
carryout a professional assignment, he ends up paying service tax
again on the entire amount of reimbursement sought i.e., while seeking
reimbursement of Rs 10,060 from client, he shall have to charge and
pay service tax again. The intention of law is perhaps not this. The
rules need to be suitably amended.

Regards