Good morning, good evening, good afternoon, whichever time
you are watching this.
Sir, I am C. H. Shreyagupta, your friend, your companion,
your sympathizer.
In this discussion on tax, we were discussing on PGPB head.
And our last lecture was very interesting.
On section 37, our discussion was going on, that which
expenses, general expenses, which were there, which we had
allowed.
While discussing this, we came to the conclusion that our
legal expenses, salary expenses, electricity expenses,
marketing expenses, petrol diesel expenses,
I can put all these in my Profit and Loss account.
And I can reduce my profit due to all these expenses.
What was this?
Which the government gave me permission in section 37 by
giving thumbs up.
Now what is the government saying? Thumbs down.
It means, now let us talk about some expenses, which you
will definitely spend.
It is business.
In business, expenses are spent every minute.
Now we will talk about that, you will definitely spend, but
you will get a deduction of half or full of that expense.
I mean, you will not get full, you will get little, you
will get in some percentage.
You will not get 100% deduction.
You will get some percentage.
Or it is also possible that you will not get the deduction
of that expense.
These are some of our expenses.
We will discuss that in today's lecture.
I have told you what we are going to do today, friends.
Till now everything was clear.
We were talking about the same expenses, which we can put
in P&L.
Now let us talk about those expenses, which I will
definitely put in P&L, but the income tax people will not
allow me.
But I have put it in P&L.
So what should I do?
The income tax people are saying, have you put the expense
in the Profit and Loss account?
I will say, yes, I have put it.
Okay, if you have put it, then do one thing.
We are not going to allow it.
So what should you do with that expense in your Profit?
Add it.
Remove that expense from your Profit and Loss account.
Remove it.
Remove its effect.
Remove the expense.
Remove its effect.
If there is an expense in the Profit and Loss account, then
add that expense back.
Due to the expense, your Profit came down.
Now your Profit will come back to that level.
Okay, sir.
Shall I move ahead?
Section 40 is there.
We will discuss about Section 40.
What is it?
I will tell you later.
I am narrating a few stories to you.
In that story, I will ask you some questions, like every
time.
And your job is to answer those questions.
It is an interesting discussion.
It is a discussion.
You have to listen, understand and try to understand what
it is.
And answer the questions that are asked.
In a peaceful manner.
Jai Bharat Mata.
And whatever I know, I have made a map of Bharat Mata.
This is India.
Okay, sir.
And I am somewhere here.
This is India and I am somewhere here.
And suppose my company is running.
In that company, I made a profit of Rs. 1000 crores in a
year.
How much profit did I make?
I made a profit of Rs. 1000 crores.
Now what will I do?
I have my investors in my company.
I have my customers.
I have some clients.
I have some prospective customers.
There are some people who are my prospective customers.
I have to impress them.
Look, I am such a big person.
I have such big contracts.
I have such a big revenue.
And I have made a profit of Rs. 1000 crores.
Now what will I do?
I have to do marketing.
I have organized a party.
I have organized a party in a Taj hotel.
Where is the Taj hotel?
For example, there is a Taj hotel in Mumbai.
Taj.
I have organized a party here.
I took all the people from here in an aeroplane.
From a private jet, I took them to a Taj hotel in Mumbai.
To organize a party.
I told them to stay here.
Eat, drink and have fun.
I will get a deduction in section 36.
It is a marketing expense.
I will get a deduction in section 36.
It is a marketing expense.
The company will get a deduction.
The company's profit will be reduced.
No one can refuse.
It is a legal expense.
It is for business and profession.
It is a revenue nature expense.
It is a marketing expense.
Now you see,
Businessmen, You see, this person is spending.
You go to any shop.
You see, this person is spending a lot.
Cars are being bought.
Petrol tanks are being filled.
He is going by a private jet.
Brother, the expense that this person is doing,
He is not doing it because he is earning from his pocket.
He is spending from someone else's pocket.
He is the director of the company.
The company will get his expense.
If he goes by a private jet,
And comes back by a private jet,
He will travel in a private chauffeur car.
The company will get all the expenses.
The company will say,
Brother, do one thing, give me the bill.
And we will show the bill to our auditor.
See, we have this paper.
This is the bill.
And I,
Legally, I will show the expense and reduce my profit.
The company is getting profit now.
It is beneficial for the company.
But if it reaches an individual,
If it reaches a salary person,
He will lose his entire salary for a month.
And the salary person compares this to the business person.
That, That person is spending.
Brother, that person is not spending.
The company is doing it.
And the company is getting its benefit.
The company is getting the benefit of spending.
What benefit is the salary person getting?
After that, the salary is in his hands.
Now, the income of the person who will spend,
Will be reduced.
After tax salary is coming,
After TDS is deducted,
The salary that is coming,
That is for my own expenses.
That will be deducted.
In the style of showing.
So, brother, that is why it is said,
If you are a salary person,
Don't show off by looking at others.
The person in front of you is showing off.
Keep this in mind.
He has a business and profession income from behind.
He will get the bill made.
Not in his name.
He will get the bill made in the name of the company.
If petrol is pumped in the petrol pump,
The credit card or debit card that he will give,
He will give the company's.
He will not give his own.
He is a salary person.
If he sees, he will blow his own house.
Don't show off by blowing your house.
The person in front of you is a business and profession
person.
He is getting the deduction there.
Brother, I don't know where we had gone.
We were talking that this is the map of India.
And my net profit of 1000 crores is done.
And I am going to Mumbai to make a party.
I am going to Mumbai with my clients, customers,
stakeholders and investors to make a party.
Now I said that there is a party.
It is a party of rich people.
I have to make clients.
So what do I do?
I will call a US troupe from the USA.
They do cultural events.
They have become musicians.
They have become artists.
I will call a US artist.
And there is a very famous singer named Shakira.
She is my favorite.
Shakira.
She has many famous songs.
I will call Shakira madam from here.
I will say that we have reached the net profit of 1000
crores.
And I would like that you come to India at a private party.
And I would like you to dance with me.
She will say okay, no problem.
Pay me.
She asked me for 100,000 dollars.
How much did she ask?
She asked me for 100,000 dollars.
I said that I will take 100,000 dollars to dance.
If it is okay, I will give it to you.
So Shakira madam was here.
She was Shakira.
Shakira madam took a flight from here to Mumbai.
For what?
To give her services.
Which services?
Music.
Music and dance.
To give music and dance services.
She came to Mumbai to our party.
We organized her dance performance.
To show it to people.
To do marketing for our company.
To see how far our relation is.
Okay.
Now what is the problem in this?
The problem is that it is 100,000 dollars.
And the rate is 82 rupees.
Sir, you are talking about the forex.
It is 82, 83, 88.
He is not talking about that.
I have talked about that once.
And what I say once, I will say again.
I never say it by mistake.
Sir, you are such a big liar.
In every lecture, you tell me what you have done before.
Come on.
For example, I have to pay 82 lakh rupees.
Now understand the case.
A little serious.
Serious.
Come on.
Who has to pay 82 lakh rupees?
Shakira has to pay.
For dance performance.
She has come to Mumbai.
She is dancing in my party.
With me.
I consider myself as Govinda.
And she considers herself as Raveena Tandon.
And we are dancing.
Go to some disco.
Sing in some hotel.
Come on.
Fight love.
Now what is the problem? 82 lakh dollars.
I have to pay 82 lakh rupees.
And she is non-resident.
Okay.
She is NRI.
Non-resident Indian.
Government says that you are paying.
Because she is giving performance of music.
In a way, she is giving professional services.
Dance and music.
She is bringing 25-30 artists with her.
Government says that you are paying a non-resident.
Whenever you will pay a non-resident, you have to deduct
income tax and TDS
And TDS is around 20%
You have to deduct 20% of TDS
TDS is around 16,40,000 and I will have to pay the rest of
the money
Now the problem is that in that dance party
I was so busy that I paid the entire amount of Rs.82,00,000
Although I should have deducted Rs.16,40,000 from
Rs.82,00,000
So it would have been around Rs.65,60,000
I should have paid Rs.65,60,000 to Shakira ma'am and
Rs.16,40,000 to the income tax department
I should have paid their tax
But I was so busy that I got carried away
I made a huge mistake and that mistake was that I paid the
entire amount of Rs.82,00,000 to Shakira ma'am
I forgot to deduct the tax on that money I made a mistake,
I forgot to deduct the tax on that money
The government said that you are such a careless person
that you did not deduct the tax on that money
And that too on that person who does not even have an
address in India
She came to give her music performance and left the next
morning Now where will we go and find her?
From where will we collect the tax on her?
Sir, you have caused us a huge loss
You have caused a huge loss to the government of India
Because of this, you will not get any deduction of this
money 100% expenses will be disallowed
You have spent Rs.82,00,000
Rs.82,00,000 of Rs.82,00,000 will be disallowed in this case
If you would have paid the TDS then it would have been
allowed
But now Rs.82,00,000 of Rs.82,00,000 will be disallowed
I will not get any deduction of Rs.82,00,000
In a way, it will be considered that I have given the money
from my pocket
That is why you should have a party, music and dance But
keep in mind that you are not losing anything
So next time if a foreigner comes to a party for a music
and dance performance Ask the party organiser if he will
deduct the TDS from the payment
If not, then you will not get any deduction of the expense
This is the point
You have not deducted the TDS
It is also possible that I have deducted the TDS
During the party, I was in a state of shock
I had to deduct the TDS from the payment
So I paid Rs.65,60,000 to Shakira
I had kept Rs.16,40,000 deducted
I thought that I will go to the government and get the
money deposited But the party environment was such
The party environment was such that I forgot to go to the
government and get the money deposited
I made a mistake again
I forgot to get the money deposited till the due date
Will I be punished for this?
The answer is yes
You made a mistake
You gave the money to madam in a lesser amount
But the money you deducted from the payment in the name of
tax
You did not get the money deposited to the government till
the due date In that case also, your expenses will be 100%
disallowed in the hands of the businessmen
We will talk about what Shakira will do later But in your
hands, it will be disallowed
You will get the money in your profit and loss account
You went to Delhi to Mumbai to party
You will get the money here
But the expenses of Rs.82,00,000 will be disallowed in your
hands
You will have to add back
If you have shown the expenses to her
This is the point
Shakira came but she caused a huge loss to me
I will delete all her songs from my phone
I will stop looking at her pictures
I have forgotten who Shakira is
Don't remind me of that street again
Because I don't want to go to that street again
Where a musician, dancer and artist named Shakira lives
She made me pay Rs.82,00,000
Section 40A.I
What does it say?
Read it
Any interest, royalty, fees for technical services or any
other sum
Chargable which is payable outside India
Or you are paying to a non-resident in India
On which tax should have been deducted On which tax is
deductible at source
And such tax has not been deducted Either I didn't deduct
that tax
Or
After deduction
But I didn't deposit it
Has not been paid on or before the due date of filing the
return
So what will happen?
Your expense will be disallowed
This is the point
Your expense will be disallowed
But the government said
There can be a genuine reason
Sometimes a person does not have the knowledge
Mr. Gupta, you are a chartered accountant
Whether to deduct TDS or not
For example, I have taken someone's services Why Shakira?
Assume that
I have taken the services of an engineer
I should have deducted TDS on his services
I didn't
I forgot, I didn't know
I will deduct it when I know Whether to deduct TDS or not
I didn't know whether to deduct TDS or not
What to do now?
In that case, the government said
We also understand
The knowledge of law comes slowly
One does not become a drama king overnight
It takes a lot of effort
To gather the knowledge
The ocean is formed by a drop
If you study slowly
Then you will be able to
Swim away from the tsunami
Assume that a person does not have the knowledge of TDS
Then he will incur a loss
The expenses will be disallowed
It will happen
There is a genuine reason
I don't know whether to deduct TDS or not
What to do now?
The government said Friends, good days have come
In good days We will only talk about good things
We will only talk about good things We are saying that
If the other party
The engineer and Shakira
For example
That party
The income
She has shown it in her account She has shown it
To compute her income
She has shown it
She has paid tax on it
Because Ultimately the services Which Shakira madam gave
She gave services in India
Received payment in India
She will be taxed in India
For example
She has included 82 lakhs
In her income computation
And on that 82 lakhs
She paid tax on her own
I paid 82 lakhs without deducting TDS
I forgot to deduct TDS
I didn't know whether to deduct TDS or not
I gave a cheque of 82 lakhs
Now she has shown 82 lakhs
Income Did she pay tax on 82 lakhs
On her own? Yes
Did she take a certificate from a chartered accountant?
Yes she did
In that case
The government received the tax
Which you were paying
But you couldn't pay the tax
So Shakira madam paid the tax
So in this case
What does the government have to do with it?
The government simply wants tax
Either you give it or she gives it
Has the government
Received Shakira madam's tax?
The answer is yes
When Shakira madam's tax is received
Will you get the deduction now?
Should you get it legally?
Yes You will get it
Now that expense You can take it
You can claim it
You can put it in your profit and loss account
My dear
You can put it in your profit and loss account
The expense
Which I was making
Now in the deduction of 82 lakhs I will take that expense
Why will I take it?
Because Shakira madam was so talented
She added 82 lakhs to her income She paid the tax
And took the certificate
CSA And she has also filed her return There are three
conditions
She has filed her return
She has shown her income
In the computation She has shown it
She has paid the tax to the government
Yes she has And the government has received the tax
So why are you troubling this businessman?
The mistake of this businessman was
That he could not pay Shakira's tax He could not pay it
So Shakira paid it
Now don't trouble this businessman
You can give him a 100% deduction And friends
Today I am standing in front of you
And I am giving you a deduction of 82 lakhs I have got the
deduction only and only through Shakira madam's Kark Kamlod
She was so talented that she wrote the written file
and she also deposited the text
So friends, I have downloaded Shakira madam's songs again
Now I listen to her songs again
And again, when I will go to America, I will definitely
meet her
Shakira, I love you
This was the concept, friends
Is the point clear?
This was the concept, sir
He is saying that if for example
Shakira has furnished her return, he has taken into account
such sum and
has paid the tax due, it shall be deemed that SSC has
deducted and paid the tax on such sum, on the date on which
return of income has been furnished by the payee and you
will get the deduction at that stage
Since the date of furnishing the return of income by the
payee
is taken to be the date on which payer has deducted the tax
The date on which Shakira will file her return, that date
will be considered that I have paid the tax that I was
supposed to pay
So such expenditure in respect of which payer has failed to
deduct the TDS shall be disallowed
under 40 AI in the year in which expense is incurred
However, this expenditure will be incurred in the next year
when the return of income has been paid by the payee
I spent in 2021, in 2021 I was not able to deduct the TDS,
no problem
In 2021, my expense was disallowed of Rs.
8.2 Lakh, but when Shakira filed her return in 2022 it was
assumed that I have deducted the TDS in 2022
Now in 2021, I was disallowed of the expense in my hands,
in 2022 my expense will be allowed
in the year in which Shakira will file her return of income
This is the concept
Is the point clear?