out of expenses spent

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out of expenses spent 2017-07-01T18:45:25+00:00
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  • Hanumanthasetty Vishwanathasettyhanumanthasetty vishwanathasetty
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    #2363 |

    for executing a service, some amount are spent and will be recovered on actuals from the service receiver, no tax was leviable on such amounts as per service tax rules herebefore. What about under GST.tax on out of pocket expenses.

    Ramasamy UlaganathanRamasamy Ulaganathan
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    Just want to clarify that as per the Service tax valuation rule 5 (1) any expenditure / cost incurred by the service provider in the course of providing taxable service, all such expenditure / cost shall be treated as consideration for taxable service and needs to be added for arriving taxable value to calculated Service tax.

    Though, there was Delhi HC ruling against the above valuation rule, Department filed SLP in Supreme court and case is still pending before SC. Until SC give it final ruling on this matter. ST on out of pocket expenses will be highly litigateable if tax not collected.

    There is no changes in valuation rule in GST regime. Hence, it is advisable to collect GST on the reimbursement portion if it is incurred during the course of providing taxable service.

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