04-11-2007, 09:45 PM
Dear,
Actual re-imbursement of out of pocket/ re-imbursale expenses is not subject to deduction of tax. Accordingly, you will deduct @6% tax only on the value of services received by you.
I cannot understand that who will keep the connection obtained by your service providers. These are mainly asset and receivables (at least Security) and should not be claimed by them as an expense unless the connection is handed over to your company at the end of contract. If these are handed over to your company after the conclusion of contract how you will change the ownership in the record of GSM company.
These are the crucial points and must be considered by you.
If these are handed over to you, and you get the connection transferred to company's name at the end of contract, you should account for security (Rupees 6,000) as an asset and remaining expenses (Rupees 2000) as expenses. However, payment will be made in full to service providers.
If GSM connection is not taken back by you at the end of contract and it is not transferred in your name, due to any reasons, you should expense out total amount i.e. Rupees 8,000.
In both cases tax is not deductible on re-imbursable amount.
However, you will deduct tax on service value payment at 6 %.
Regards,
Kamran.
Actual re-imbursement of out of pocket/ re-imbursale expenses is not subject to deduction of tax. Accordingly, you will deduct @6% tax only on the value of services received by you.
I cannot understand that who will keep the connection obtained by your service providers. These are mainly asset and receivables (at least Security) and should not be claimed by them as an expense unless the connection is handed over to your company at the end of contract. If these are handed over to your company after the conclusion of contract how you will change the ownership in the record of GSM company.
These are the crucial points and must be considered by you.
If these are handed over to you, and you get the connection transferred to company's name at the end of contract, you should account for security (Rupees 6,000) as an asset and remaining expenses (Rupees 2000) as expenses. However, payment will be made in full to service providers.
If GSM connection is not taken back by you at the end of contract and it is not transferred in your name, due to any reasons, you should expense out total amount i.e. Rupees 8,000.
In both cases tax is not deductible on re-imbursable amount.
However, you will deduct tax on service value payment at 6 %.
Regards,
Kamran.
