Dear Sir, Our Company is in the business of freight forwarding & custom clearance. At times the Shipping Line & CFS raise bills in our name instead of our clients. In order to pass on the GST benefits to the client, we have to raise our bills on the clients for the same amt. Its a pure reimbursement bill & we have no profit element in it. In such case , is our client liable to deduct our TDS ???
Hi,
- No TDS would be deducted on the reimbursement part. Also no GST would be applicable as it is a case of pure agent. Please draft and agreement with the client for the costs to be incurred by you on his behalf and later on to be reimbursed by him. Please mention reimbursement cost separately on the invoice.
Thanks
In case if it is pure reimbursement & If client is deducting TDS then by logic you should have fallen in same condition & deducted TDS on bills raised by CFS.
Logic Apart.
TDS need not be deducted in case of reimbursement of expense. ( pure Reimbursement). ( You may mention it in your invoice that is pure reimbursement - & add a copy of supporting)
Kindly make sure you do not raise reimbursement bill along with bill for your services as in such case TDS deduction becomes mandatory.
To conclude No TDS needs to be deducted where separate reimbursement bill is raised .
As per the reading of the TDS provisions, taxes are deducted on the gross amount payable. Hence, to avoid any interest and penalty the payer would prefer to deduct taxes and pay the amount. However, based on supporting’s one can argue that this payments are not in nature of any income on which TDS is applicable. This requires strictly back to back supportings and maintenance of documents. But this can be debated by the income-tax authorities and payer can be in litigation. Hence, it is always advisable to obtain lower deduction certificate from income-tax officer for such parties.
Amounts paid by way of reimbursement of expenses do not constitute income in the hands of the recipient. Consequently, the payer is under no obligation to deduct TDS u/s 194C and no dis allowance of the expenditure can be made u/s 40(a)(ia).
Since you are acting as a pure agent and the client is just reimbursing your amount no TDS is required to be deducted and do mention same in your bill also no TDS is required to be charged on same separately you can just add GST to pass on the credit, but do make proper agreement for same as you would raise GST invoice there could be a query for non deduction of TDS.
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Thank you
Hi,
Hope you are doing well !!
No, your client is not liable to deduct TDS.
No TDS is required to be deducted on reimbursement.
Hi
Acting as a pure agent merely for reimbursement of expenses, your TDS shall not be deducted.
Yes, you can pass on the GST benefit.
Make sure you have an agreement for such transactions for the purpose of proofs.
Hi
No TDS to be dedutced on Reimbusement bill.
Hope it helps
Hi,
No tds needs to be deducted on reimbursement bills.
