Is TDS deducted on reimbursement of expenses?

Question

tdsguru.in (CA firm) · Accepted Answer

Pure reimbursements billed separately on actuals usually do not attract TDS; but if reimbursement is bundled into a composite service bill, TDS applies on the whole amount. Where a vendor raises a separate invoice for pure out-of-pocket expenses supported by third-party bills, TDS is generally not required on that reimbursement, as it is not income in the vendor's hands. However, if the reimbursement is included in a single composite invoice for the service (for example, a consultant's fee inclusive of travel), TDS applies on the entire amount under the relevant section. Keep reimbursements separately invoiced with supporting documents to stay safe.