Hi friends, how are you all?
Good?
Good, it's a very good thing, friends.
We have reached the middle of the chapter.
We have talked about the expenses of rent, depreciation,
section 34, we have already talked about the expenses of
scientific research.
Today we have to start a new section, section 37.
As I explained to you in the last lecture, the base of this
chapter will be on expenses.
Because the more expenses I put, the more profit I will
earn.
Government, i.e. income tax officials will also look at my
expenses.
They will think that I should reduce my expenses, show
less, they will allow less.
I will try to show maximum expenses.
Some specified expenses, like rent, repairs, depreciation,
section 35 and section 36, like bad debts, employer
contribution, interest.
There are separate sections for them, they will be treated
there.
We have already discussed what they have to do and what not
to do.
Today we will talk about some general expenses.
We will try to understand whether we will get a claim for
the general expenses
or the income tax officials will disallow it.
It is a simple thing.
Today we have to do this.
It is going to be a very interesting lecture.
In this lecture, I have to make a deal with you.
You also make a deal with me.
I will keep asking you and you keep answering me.
General expenses.
General expenses. Close your eyes.
Close your eyes and imagine that you are the owner of a
company.
Your office is spread out in 10 acres.
Behind the office is a red factory.
In this factory, a lot of labour is being done, machines
are running, goods are being made.
Don't open your eyes. Imagine.
You are sitting in the office on the director's chair.
All your staff is working in the same office.
Behind you is a factory building.
Labour is working there.
Production is going on.
You have a marketing team.
You have a department for accounts.
There is a department for production.
There is a department for HR.
For all these departments, there are their respective heads.
Now, you tell me.
What will be the expenses in your office?
What will be the expenses in your business?
What will you spend?
Let's start.
First of all, you will enter the gate.
Who will greet you at the gate?
The watchman.
Will you pay the watchman's salary?
Paying the watchman's salary is related to my business
expenses.
So, can I put it in my P&L account as expenses?
Yes or no?
I will put it.
What is there?
I will make a salary head.
In that salary head,
I will put the watchman's salary.
Then I go inside.
I get a peon.
He will give me a glass of water.
I will tell him to bring tea in the room.
What will I give to that peon?
Salaries.
His salary will also come in this head.
As soon as I enter my room,
I will press the switch.
Electricity will come.
My tube light will burn.
But what will I have to spend for that tube light?
Electricity.
Electricity is also spent in business.
Electricity expenses.
How will it work?
Will I have to install a tube light there?
Tube light, bulbs, fans.
Will I buy all these things?
I bought a tube light for 100 rupees.
My consumable expenses are like this.
My daily expenses are like this.
I bought a tube light.
That is also my expense.
I bought a bulb.
That is also my expense.
Day to day running.
In our office, we have a culture that we make everyone
drink tea twice. With biscuits.
Marigold and Parle-G.
Those who have sugar can have Marigold.
Those who don't have sugar can have Parle-G.
G means genius.
Gupta.
Who is Gupta? I am Gupta.
I should also get a deduction for the tea and biscuits.
Because it is for business.
I am not drinking my personal tea.
Business is going on.
Until people don't get tea, there will be no efficiency in
work. That is also my expense.
I can put tea and coffee here.
I can put these expenses here.
For that, for example, if I order tea from outside and I
have a small kitchen,
I can put the milk expense here.
Now I have started my computer.
I need internet.
For that, I have Wi-Fi.
I can put that expense here.
There is no problem.
What else can be spent?
If a courier comes from somewhere,
I have to courier someone.
It can be the expense of the courier.
Tell me as much as can be spent in business.
A car is coming.
How is the car running?
The goods are coming in a truck.
The goods are going in a truck.
How is the truck running?
Does it run on petrol or diesel?
What else can be spent on petrol and diesel?
What else can be spent?
If I have to do marketing,
I have to put my name on the t-shirt of the company.
And I tell everyone that on Saturday, which is our half
day, wear these t-shirts.
So my marketing expense is done.
Okay? For example, a case of our company is going on.
I have to get advice from a lawyer.
Legal expenses have come.
Legal expenses.
Okay? I have also hired a CA who audits me.
He comes in a year.
His audit fees have been paid.
Okay? Our audit fees have been paid by the CA.
What else can be spent?
Marketing expenses have been paid.
Newspapers come to our office.
We read the newspaper.
What else can be spent?
Paper, pen etc.
Pen, marker, paper.
All these things.
What else can be spent?
For example,
I have a teaching job.
I have to put the battery in the microphone.
All these expenses.
Where will I put all these expenses? I will put it in the
profit and loss account.
What will happen with these expenses?
The government tells you that whatever your expenses are,
your expenses related to your business and profession, your
expenses related to your business and profession, you can
get a deduction for those expenses.
You can put those expenses in your profit and loss account
and reduce your profit.
Because we also understand that without doing all these
expenses, no person can do a business in this world.
Without paying salary, can you get any person to work? If
there is no electricity in your office, you will have to
put diesel in the generator.
Without diesel, your work will stop.
It won't go ahead.
Then what will you do?
So, in a way, you should be allowed to spend on diesel.
You will get it.
You get couriers done.
Staff salaries are done.
Printing is done.
Legal cases are being wasted.
All these expenses will be allowed to you.
So, there are some conditions, my dear.
It is not just that you are allowed to do this.
There are some conditions for this as well.
If you fulfill these conditions, you will get these
expenses.
First of all, these expenses should be of revenue nature.
These expenses should be of revenue nature.
These expenses should not be of capital nature.
Why am I saying that these expenses should not be of
capital nature, sir?
Brother, tell me one thing.
Tell me one thing.
We had invested 3-4 lectures.
On a topic called depreciation.
What did I say?
You spend capital and create an asset.
You don't get a 100% deduction on that asset.
But as the value of that asset decreases, we show it as
depreciation.
You get the expense of that asset as depreciation.
So, you are getting the expense of capital expense as
depreciation.
Why will you take it again and again?
The more years that asset will run, the more depreciation
you will take.
You take the remaining expenses on the basis of revenue.
The remaining revenue expenses, like postage, courier,
petrol, staff salaries, diesel and petrol expenses.
You take these expenses.
Second condition.
Brother, all these should be related to my business and
profession.
There should not be any personal expense in this.
What are all these expenses?
Expenses of my staff.
Expenses of myself.
These are all expenses of my staff.
I cannot run my business without them.
What is the personal expense in this?
There is no personal expense in this.
It should be of revenue nature.
It should be of business and profession.
All these expenses should be legal.
What are these expenses?
These should be legal expenses.
Sir, are there any illegal expenses?
Yes, there are.
Sometimes you must have heard in old films of Amitabh
Bachchan.
He bribed someone to get a tender.
He got to know how much the other party has paid for the
tender.
And how much he has paid for the tender, we will pay him at
least one rupee.
we will get it. You must have seen it. Amitabh Bachchan
used to go in such films.
He used to take a tender by giving bribe.
For example, your truck was going from somewhere, your
luggage was going, you were getting the transportation
done, your truck was catching the speed on the highway.
The truck was going at a speed of 60-70, it was going, it
was going.
The driver's phone was also coming to you that sir, in 2-3
hours I will send your luggage from Delhi to Jaipur.
The speed is coming out well.
And as soon as my luggage will reach, the other party is
ready with the money.
As soon as I will deliver the luggage, the money will come
to your account.
Okay, it will come after 2-3 hours.
But something happened on the way that he started over
speeding and the police stopped him on the way.
The police
met the uncle and the uncle said, Kartar sir, the driver's
name was Kartar, Kartar sir, come down son.
You were over speeding, so Kartar comes down and says,
uncle, hello, how is aunt? He says, son, I know everything
that uncle, aunt and uncle are doing.
50,000 people come every day and do the same work.
Kartar says, I know everything, I know everything,
I know everything, I know everything, I know everything, I
know everything, I know everything,
I know everything. 50,000 people come every day and do the
same work. Either give me Rs.
1000 or I will deduct your fine of Rs.
10,000. Who is sensible? To deduct Rs.
10,000 fine or to give a bribe of Rs.
1,000 and quietly return your work, your truck to reach
Jaipur and take money from the police.
Who is sensible? I will deduct Rs.
10,000 fine and then
I will go to the court or pay Rs.
1,000 and solve the case.
Who is sensible? As a businessman, your stuff is stuck
somewhere in the middle of the road.
He says, I will deduct Rs.
10,000 fine.
What will you do? You will say, uncle, take this Rs.
1,000 and take sweets for the kids.
Kartar did the same thing.
He called me, sir, what should I do? I said, son, give
Rs. 1,000 and finish the matter.
He said, sir, take Rs.
1,000 and take sweets for the kids and sister-in-law.
He says, son, in a minute you made three relatives.
You made uncle and sister-in-law and now you have Rs.
1,000. Now the question is, should I deduct the bribe of Rs.
1,000? Should I put a bribe here? Should I put a bribe?
Should I put a bribe? Sir, understand this problem.
If I allow a bribe here, how big a problem can it be? You
cannot imagine.
Suppose, if my gross profit here is Rs.
1,000 crores.
If my gross profit is Rs.
1,000 crores, I will put a bribe in cash of Rs.
1,100 crores.
If the profit is Rs.
1,000 crores, I will finish it.
I will claim a loss of Rs.
100 crores so that I can also reduce the loss from the
profit in the coming years.
How big a problem can it be if I start putting a bribe
here? They say that the fat in the stomach of those who
take bribes is like the food of my poor brother or sister's
children.
Taking a bribe and giving a bribe is a legal crime.
You cannot escape it.
And sir, the government said that if we allow a bribe here,
we ourselves will be trapped.
That is why you do not get bribe expenses here.
That is why the government said that we are not allowing a
bribe and your expenses should be legal.
There should be no illegal expenses.
I gave some payment to a goon.
I said to the goon, do one thing, take
Rs. 500.
And the goods that I get, if any person stops that goods,
even if a police officer stops that goods, go and beat that
police officer.
That uncle should know who his nephew is.
Now the Rs.
500 payment that I have given to that goon, should I also
get expenses for this? Think and tell from the government's
angle.
If I start getting such expenses, will I keep showing
expenses of goons here? I have made a payment of Rs.
1000 crores.
I will directly get Dawood Ibrahim to pay the expenses.
The government said
to stop.
The expenses should be legal.
There should be legal expenses for business and profession.
There should be expenses of revenue nature.
It should not be that you are spending capital.
These are some conditions.
Come and look at this more.
I will remove this.
Have you noted this, friends? If you have not done, then
look at it once.
There is no noting like this.
These are general things.
Take a screenshot of this.
Let's go.
Let's see the reading. What is the text? What does it say?
It is talking about expenses.
Residual expenses.
Residual means the remaining expenses.
It says that this section allows us to spend.
And what are its conditions? Come to the conditions.
Its conditions are that the first thing is that the
expenses should not be between 30 to 36.
Do you remember
what it was saying in 30 to 36? Rent, depreciation,
scientific research assets, bad debts, etc.
We have seen that separately.
We are putting that.
Its treatment was supposed to be in 30 to 36.
It is not that they will not put it.
They will put it.
It is there.
We are talking about beyond that.
General expenses.
Those whose description
is not in 30 to 36, where will their description be? In
section 37, my dear.
It should have been incurred by the SEC.
It is not that it will be done in the air.
Have you actually spent? Have you spent? Whether on a due
basis.
You have not paid yet.
You have entered it in the books.
You will get it.
It should not be a personal expense.
It should be wholly
and exclusively for the purpose of business.
It should not be a capital expense.
And it should be a legal expense.
It should not be an offence which is prohibited by the law.
I had said that taking a bribe and giving a bribe are both
legal crimes.
It is an offence which is prohibited by the law under the
Indian Penal Code, my dear.
Sir, English.
Sir, what do I have to say? These are some expenses which
will be allowed to you.
are some expenses which are not allowed to you.
Tell me one thing.
First tell me the expense of advertisement.
Advertisement, I have done for my business.
For example, Reliance
Industries Limited. Reliance's ad comes. Reliance Company
says that this is our company.
Our company sells these things.
We provide these services.
So please come and buy these
things from us.
Reliance Company's ad comes.
So in that case, it is a business related
expense of Reliance. 2 crores, 5 crores, 7 crores would
have been spent on that ad.
Reliance should get its deduction legally.
If you spend on advertisement, you will get
the deduction legally as you have thought.
Where will be the problem? If you are making
advertisement in a political party's magazine or pamphlet
of a political party, if you are publishing your
advertisement there, for example, a political party, Shiv
Sena, you must have heard of him.
He is famous in Bombay and Maharashtra.
He publishes his
magazine in the name of Samna. Many businesses publish
their ads in that magazine as well.
Because it circulates in the Marathi language, which
Marathi customers want to attract.
I want Marathi customers, my objective is to publish my
advertisement in Samna magazine.
So that the Marathi people who will read the magazine will
feel that I should buy something
from this company.
Samna's magazine is being published by a political party.
If I publish an advertisement in that, the government says,
no, no, no, no, no, no, no, no, no, no, no,
no, no, no, no, no, no, no, no, no, no, no, no, no, no, no,
no, no, no, no, no, no, no,
no, no, no, no, no, no
Do I live up to your expectations?
If this is the case, then my dear, I consider myself very
lucky, fortunate, that I have met viewers like you, who
listen to me very carefully, understand me, and practically
tell me the answers, the legal expenses that you were
telling me, you were telling me all this.
However, you must be thinking, how is your voice reaching
me?
Sir, the voice from the heart does not need telephone video
conferencing.
You thought this in your heart and it reached my mind.
Our relationship, our bonding has become such that we do
not need anyone.
Whatever you think will happen.
Whatever you think will reach me.
I don't want to waste your time. Come to the topic.
Absolutely.
Your order.
I am Nath Mastak.
I will come to your topic.
We were talking about advertisement expenses.
If you are spending money on advertising in a political
party magazine, then you will get a deduction.
You cannot put it in a P&L account.
You will get a deduction in the chapter of deduction.
One word is
Corporate Social Responsibility.
For example,
Samna magazine.
This is from Samna.
For example, this is from Samna.
If I want to publish my advertisement here so that
Maharashtra's audience can see me.
In that case, I will not be allowed to spend.
One is Corporate Social Responsibility.
All the big companies which have a turnover of more than
500,000 crores, they are called
Corporate Social Responsibility.
You are a big businessman.
You should invest in social causes.
By social causes, I mean you should build hospitals,
schools, charitable activities.
This is mandatory by the government.
There is a threshold limit.
If you have a turnover, share capital or assets, then it
becomes mandatory for the company to fulfill a social
responsibility.
Who is fulfilling it? The company.
That is why it is called Corporate Social Responsibility.
Corporate Social Responsibility relies a lot.
Have you ever seen
Mukesh Lalaji?
Mukesh Ambani?
He has a line.
The name of the line is
Neeta Mani.
She is responsible for
Corporate Social Responsibility.
She has a lot of trust.
In that case, if a Reliance company is spending, look at
this image.
I believe that by showing the picture, it is easier to
understand.
This is Neeta Madam.
If Neeta Madam spends in this case, look at this.
For example,
Reliance Foundation is responsible for
Corporate Social Responsibility.
It opens a school.
Students are studying in Reliance Foundation's school.
In this case, should Reliance get a deduction for spending
on the school?
There is no deduction for Corporate Social Responsibility.
It is your duty.
Don't assume that you will get a deduction for spending on
the school.
It is your duty.
Where there is a duty, there is no loss or profit.
It is your duty to serve your parents.
No matter how they are.
They have brought you up.
It is your duty to serve them.
Now you have grown up.
Go and take their problems on your shoulders.
It is your duty.
Even if you are getting a loss, you will get a benefit
somewhere else.
Where there is a duty, there is no loss or profit.
Reliance is a big company.
It has a duty to serve the society.
It will not get a deduction for spending.
This was our section 37.
This section talks about general expenses.
Will we get general expenses or not?
We will get GST payment.
Have you paid GST?
If you pay GST, what will happen?
Show your Profit & Loss account expenses.
Reduce your Profit.
This was section 37.
This was a good section.
What did this section teach us?
It taught us that your general expenses which are not of
capital nature are of revenue nature.
Show them in your Profit & Loss account.
Reduce your Profit.
Businesses, shops, showrooms, check your Profit & Loss
account.
I say this every day.
Check your expenses.
There may be a lot of expenses.
Sweeper's expenses, peon's expenses, trade association's
expenses.
You can claim the expenses.
Take their receipt
Show your expenses in your Profit & Loss account.
You should have proof.
Can your bank statement be your proof?
Or if you have paid in cash, you can take the receipt.
Go and check.
Otherwise, what is the use of giving a class?
What is the use of such knowledge which is just bookish
knowledge?
I don't even believe in bookish knowledge.
I don't even teach you more than a book.
See you in the next lecture with a new topic.
Namaskaram.