Yes friends, how are you all?
Good morning, good evening, good afternoon
Whoever is watching and listening to me with their
beautiful eyes and beautiful ears
I heartily welcome them
Friends, welcome to our new Dharavai lecture
In the last few lectures, we had covered many provisions of
TDS
We had discussed about 194C
We had discussed about 194D
B, BB
We had discussed all these things
Today I want to share a topic with you
That is 194J
The topic is 194J
J means Johnny
Johnny Gaddar
Sir, what is the reference of Johnny Gaddar?
Nothing It came to my mind, I said it
Everything is not for reference
Come on, 194J
Sir, what is 194J?
What is it about?
At what rate should TDS be deducted?
On which payments should TDS be deducted?
Let's start this discussion 194J talks about professional
service
What does professional service mean?
Like lawyer's service, professional service, doctor's
service
Like interior decorator's service
Like engineer's service
Like CA's service
All these services come under professional services
If you want to check the list of all these services
Then we had read 4411 section
Maintenance of the books of accounts
Go and open that section
You will get that section in PGBP
We had covered a lot of lists there
Which people have to maintain books of accounts mandatorily
So there was a list of professionals
So the list of professionals was something like this
All these educated professionals
Doctor, engineer, CA
Interior decorator
Architects Then there were sports people
Sports umpires
Physiotherapists All these people were there
Company secretary
Film artists
All these people were there
So these are covered under professional services
Second section covers payment of royalty
Payment of royalty
Is there any royalty? How is it royalty?
Have you made any technology?
Have you made any patent?
That this particular thing
Will be made using this particular technology
And that technology
You know how to use this technology
So this thing will be made
The information of this process
You wrote the information of this process on paper
And sold it to someone in the market
That you use this technology
Do this thing like this
So this product will be made
That is called royalty
You basically sold your patent
You sold your know-how and you are earning royalty
Payment of professional services
Payment of royalty
If you take any technical consultancy from someone
Regarding that you pay a fee
That is covered here
Payment of technical fees
The directors of the company
The remuneration that you pay to them
The remuneration that you pay to the directors of the
company
The salary that you pay to the directors of the company
Whatever remuneration they get
That will come here, 194
That is covered in J
There are 4-5 payments
And those payments are here
Payment of professional services
Payment of royalty
Payment of director fees
Payment of technical consultancy
TDS will be deducted
Who will deduct it?
The person who is paying
He will deduct TDS at a prescribed rate
And that rate is 10%
You will deduct TDS at a rate of 10%
If you are paying a CA
If you have done an audit
If you have done an audit and you are paying the CA
You will deduct TDS and pay
Sir, does your TDS get deducted?
Yes, it gets deducted
What to do?
There is a cost of becoming a professional
You have to pay
Yes, studying with hard work and dedication
There is a cost
But this is also a cost
There is no problem
There is a tax
I will deduct it later
From the total tax amount
But there is a pinch
When you work for Rs.
1 lakh and get Rs.
I feel bad, what to do?
If you are paying technical consultancy
Whatever fees you will pay
Deduct 10%
If you are paying Rs.
1 lakh
Give Rs.
90,000 to that person
And Rs.
On behalf of that person
Deposit it in his income tax account
This is the remuneration of a director
The rate is 10%
Sir, whatever sections we have studied
There were limits
There is no limit of this much
Like lottery
Commission There was a limit of Rs.
In the case of rent
There was a limit of Rs.
Sir, should there be a limit in this case too?
There should be a limit
The government has said that the limit is
The limit is Rs.
There is a limit of Rs.
How to check Rs.
We have to check the professional service separately
We have to check the technical separately
We have to check the royalty separately
We have to check the royalties separately
There is no limit of directors
Whatever money you give to the director
The TDS will be deducted
I will discuss this again
I am giving you a basic example
In 194J
There are professional services
Technical services
If you pay them, the TDS will be deducted
But provided
It is above Rs.
Suppose, in the whole year
If it is above Rs.
Then will there be a TDS?
Will there be a TDS?
The answer is no
Because the government has set a limit
The government has set a limit of Rs.
And how much are you paying?
You are paying Rs.
One more interesting point
This Rs.
You have to check this separately
Suppose, one person
The example I gave yesterday
I will take it again
I will cover it again
It will be clear to you
Suppose, one person was Murari
Mr. Murari
And another person was Kunj Bihari
There were two people
Mr. Kunj Bihari was the CA
And Mr.
Murari had his own company
Murari Private Ltd
So, he needed a technical consultancy
From a chartered accountant
He contacted Mr.
Kunj Bihari
He said, Kunj Bihari
Mr. Kunj Bihari, I am Mr.
I need some technical services
I need some professional services
And I will also give you some royalties
Three things happened
I said, three things happened
Three things are being paid
Who is being paid?
Kunj Bihari is being paid by the same person
But different names are being paid
Professional services
Consultancy
Royalties
This is Rs.
And this is Rs.
First tell me the total payment
Murari Private Ltd is paying Mr.
Kunj Bihari
How much is it?
Tell me the total payment
Rs. 25,000 and Rs.
And how much is Rs.
Rs. 60,000 and Rs.
Rs. 80,000
Rs. 80,000 is the payment
And I told you that there is a limit of Rs.
There is a limit of Rs.
So, should TDS be cut or not?
Should TDS be cut or not?
There is a limit of Rs.
Think and tell me
Should Mr.
Kunj Bihari's TDS be cut or not?
The answer is no
No TDS will be cut
Ask me how?
I will tell you how
You didn't listen to me carefully when I was speaking
I was saying that the limit of Rs.
30,000 should be checked separately for professional
payments and for royalties
So my technical consultancy for that is to do a separate
check.
Even if you are paying one person and paying for different
heads, but the limit of Rs.
30,000, the limit of Rs.
30,000, is to do a separate check.
You don't have to do a per-person check, you have to do a
per-purpose check.
What did I say?
You don't have to do a per-person check.
I am not saying that if you pay more than Rs.
30,000 for one person, it will look tedious.
I am not saying that.
I am saying, do a per-purpose check.
If your purpose is professional, and if it goes above Rs.
30,000, then it will look tedious.
But suppose, there was a professional purpose, and there
was a technical consultancy purpose, this person paid Rs.
25,000, and this person paid Rs.
The purposes are different.
If the purposes are below Rs.
30,000, then it won't look tedious.
Even if you are paying the same person Rs.
50,000, but you are going through different routes.
Did you understand?
In this case, you are paying Rs.
80,000, but you have bifurcated it for different purposes.
It is going according to different purposes.
In that case, there won't be any liability for tediousness.
And my dear friends,
I feel that a person's mind is going in the opposite
direction.
He is saying, sir, this can be taxed.
I will show different payments to the same person, in
different heads.
There won't be any tediousness.
Sir, you can show up to Rs. 30,000.
You can show as many heads as you want.
You can show professional, royalty, technical consultancy,
and a few other things.
You can show up to Rs.
30,000, if you are giving it to the same person.
Yes, in that case, there won't be any tediousness.
But as soon as you go above Rs.
30,000, there will be tediousness.
For example, let it be like this.
Here, instead of Rs. 25,000, it would have been Rs. 35,000.
Then you would have to cut the tediousness here.
You would have to cut it here.
Otherwise, the provision of any tediousness on these two is
not applicable.
Because the limit of Rs.
30,000 is not checked per person, but per purpose.
It is checked according to different purposes.
Is the point clear?
Absorb it once.
And then let's move on to its reading.
Come on, sir.
Come here.
You don't have to check per person, but you have to check
per purpose.
If I give a person a payment for different purposes, up to
Rs.
30,000, there won't be any liability for tediousness.
Come here.
On whom is this provision applicable?
Every person other than individual HUF has been written.
Every person other than individual HUF.
What does it mean?
Will someone tell me what it means?
Every person other than individual HUF.
What did I get?
Remove individual HUF.
So, company came,
firm came, partnership firms came,
LLP came, some charitable trust came,
association of persons came,
in any person, other than individual and HUF.
Individual HUF has not come yet, but is it possible that
individual HUF will never come?
Is the government so heartless?
Is our Nirmala Tai so compassionate that they will leave
individual HUF?
Sir, individual HUF, even if it is far, they will bring it.
And if it is brought, read the next line, what is written?
You will see a line ahead.
That line is, the same tax audit limit, that if an
individual has sales of more than Rs.
1 crore last year, or if he is a professional, then he has
gross receipts of more than Rs.
50 lakhs, then that will also be covered here.
This is the point.
And on whom is this payment applicable?
Professional, technical.
Royalty payment, remuneration, fees, commission, by
whatever name you call, to the director of the company.
You pay the director of the company.
Remember, this is not a salary payment.
Because on salary payment, the TDS that is cut, that is cut
in section 192, which was covered earlier.
This is that payment.
Salary payment is not coming.
Other than salary, if you pay your director, if you pay a
commission, for example, my own company, let me tell you,
our export house, private limited company, we have
incorporated.
In that, I am a key management personnel.
I am an executive director of the company.
Shreya Gupta,
Chartered Accountant,
Executive Director.
What is my job?
My job is that, the orders that I can get from people
abroad,
my prospective clients abroad, who can buy my goods from me,
I go and meet them.
I show them the sample of our shirt, our cloth,
I go and show them the sample.
I go and meet them in different countries.
I tell them,
Sir, this is our cloth.
This is the sample.
If you make so many pieces, we will make it in so much
money.
This will be your costing.
This will be our profit margin.
I go and meet different directors, different people, in
different countries.
What happens with that?
One or two people like the product.
So, they give us an order,
Sir, take this order.
Rs. 70 advance.
And I want 10,000 pieces of it.
In that case, what services did I give to my company?
I am coming with an order for my company.
I am not coming with an order for myself.
I am coming with an order for my company.
I am coming with an order for my private, limited export
house.
So, the company gives me a commission.
If you are coming with an order, then you will get a
commission of 5% or 10% of the sale order.
So, in that case, the company will pay me.
I am the director of the company.
So, when the company will pay me for a commission, in that
case, the company will pay me by deducting TDS from my
commission.
And the TDS on my behalf goes to the income tax account.
Sir, this is actual.
Even from my company, even though it is my company,
I am its director, but still my TDS is deducted.
If you are working legally, then you will have to pay some
price.
And I am an honest person.
I agree that my taxes are doing good for the country.
The good days in the country are coming from my TDS.
So, I feel proud.
That is why the TDS is deducted.
But, what can we do?
The provision is there.
What payment is going?
Payment for professional services.
Payment for technical services.
Are you giving a fees commission to the director?
Are you giving royalty?
And the fifth and very interesting point is non-competing
fees.
What is the meaning of non-competing fees?
Why does it happen?
Will someone tell me?
If someone tells me the meaning of non-competing fees,
I will give him an iPhone as a reward.
Open challenge to all.
The director is also looking at me.
The director is saying, should I tell you?
If someone tells me the meaning of non-competing fees,
I will give him an iPhone as a reward.
I am waiting.
Call the number given below and tell me what is your right
answer.
We will give the iPhone to the lucky winner.
And the 10 lucky winners will get a chance to meet me.
They will get a chance to take a selfie with me and shake
hands with me.
Sir, why are you pretending?
Go ahead.
What is the meaning of this?
Shake hands and take a selfie.
We will shake hands with you.
We will take a selfie with you.
Come sir.
What is the meaning of non-competing fees?
The meaning of non-competing fees is that for example, for
example,
I have a confectionery shop.
I am not taking it as an example.
For example, I have a confectionery shop.
And its name is Agarwal Sweets.
It is a very famous brand.
Sir, this is Agarwal.
Its name is Agarwal Sweets.
Sir, Agarwal Sweets is a very famous brand.
Its sale is increasing day by day.
Many people eat its sweets and praise Mr.
They say, you have opened a confectionery shop.
One day, a poor kid came to his shop to ask for sweets.
The poor kid's clothes were torn.
He did not even have slippers on his feet.
He was hungry for many days.
He ran away from his house.
He reached the Agarwal Sweets shop and said,
Uncle, Uncle, give me a Rasmalai.
I have been hungry for three days.
I have run away from my house.
I have come to Bombay to become a hero.
And I will become a hero.
I have run away from my house.
Give me a Rasmalai.
I have been hungry for three days.
Sahab that day, he says that success also brings pride in
you.
That day Agarwal Streets guy was very proud.
He says that Ujjid Dukaan and Fika Pakwan, he pushed that
kid and kicked him out of his shop.
And that poor kid fell in front of the shop.
Friends, he said, he put the soil in front of the shop on
his forehead.
He took out a handkerchief from his pocket and tied it on
his head.
And he swore that one day I will destroy you.
Sahab, the movie goes ahead from here.
It is written on the black screen, 20 years later.
Sahab, what happens after 20 years?
That man from somewhere, that kid, here and there he worked
hard in life.
He came to become a hero.
But now he said, I will not become a movie hero, I will
become a real life hero.
He drove a rickshaw day and night.
Worked hard, polished his boots, collected some money.
And he opened his small shop right in front of this shop in
this lane.
And he named it, Inquilab Zindabad Sweets.
Inquilab Zindabad Sweets.
And he came out and put a song on the speaker.
That the desire for sales is in our hearts.
Now we just have to see how much force is in the arms of
the killer.
Sahab, that boy had such an emotion.
There was such a taste in his sweets.
That all the customers of his shop, they all shifted here.
All the customers shifted here, Sahab.
Slowly day by day, day by day, this Inquilab Zindabad
Sweets kid started making progress day by day.
One day, he made his mark.
His sales reached zero rupees and his sales of the year was
of one crore rupees.
But the man from Agarwal Sweets was not an amateur, friends.
The man from Agarwal Sweets was a very high level player.
He said, call this man from Inquilab Zindabad Sweets.
He was called for a meeting.
He said, what is your sales of the year?
He said, one crore.
Take this, a cheque of ten crores.
And he threw the cheque of ten crores in front of him.
He said, take this cheque of ten crores and leave.
After today, all your business is mine.
For the next five years, you will not open any other sweet
shop anywhere.
And you will not open any other sweet shop in Agarwal
Sweets.
This is called non-competing fees.
Non-compete.
You will not be able to compete with me.
I am giving you a price of ten crores.
Non-competing fees.
Now, you are no longer my competitor.
You are out of this market game.
Take this ten crores and throw it in front of him.
Sir, the owner of Inqalab Zindabad Sweets said, although I
do not take money that has fallen, but the amount is such
that I am getting greedy.
And you gave me ten crores.
Thank you very much for that.
From the next day, the shop was locked.
And all the customers came back to Agarwal Sweets.
Even today, the search is going on for that person of
Inqalab Zindabad Sweets.
Where is he?
If you have any information about him, do call us on the
number given below.
This was the topic of non-competing fees.
What is non-competing fees?
You are buying your competitor.
You have a competitor in your business.
You have made a payment to him.
Please, I am begging you.
Take this money and get out of this business forever.
Because it is affecting my sales.
Whether you are here or not, it is affecting my sales.
If you leave from here, my sales will increase.
This is called non-competing fees.
If Shah Rukh Khan gives 100 crores to Ranbir Kapoor
tomorrow and says, you will not do all the romantic roles
from now,
I will do it.
Take 100 crores.
What is that?
Non-competing fees.
If Salman Khan gives 100 crores to Tushar Kapoor tomorrow
and says, take this 100 crores.
You will not do any action role from now.
What is that 100 crores that will go to Tushar Kapoor?
Non-competing fees.
This is different that these two are not competitors.
Because Tushar Kapoor's level and Salman Khan's level, you
know.
But non-competing fees is to get your competitor out of the
market.
The price that you charge is called non-competing fees.
And on top of that,
TDS will be deducted in 194J.
The 10 crores that would have been received here,
Inquilab Zindabad Sweets, what will be deducted of 1 crore?
TDS.
Who will deposit?
Agarwal Sweets.
On whose behalf?
On behalf of Inquilab Zindabad Sweets, it will be deposited
in the income tax account.
This is the point.
Non-competing fees.
I hope you won't be able to forget this topic of
non-competing fees.
Come sir.
We were talking about 194J.
Some kids are asking, where are those Inquilab Zindabad
Sweets?
Son, where are those Inquilab Zindabad Sweets?
Where are they?
Now he has bought it.
Now the market is out.
There is an empty shutter there.
Come here.
Every person.
We have seen who all came.
What was the payment?
Professional, technical, director's remuneration, royalty,
non-competing fees.
What is the rate of TDS?
Although the general rate is 10%, but in which 2% is there?
If you are selling films, movies, if you are selling them,
exhibiting them, distributing them, then in that case, 2%
of TDS will be deducted.
Because that too comes under the definition of royalty.
Films, they say that we have sold the rights of films.
Like we sell rights on OTT platform.
In that case, 2% of TDS is deducted.
It is the same thing.
And the rest is 10% in other cases.
But suppose if someone is a payer, and it is the job of the
call center, who is receiving the payment, if it is the job
of the call center, then 2% of TDS will be applicable on
him.
When to deduct?
At the time of credit or payment, whichever is earlier.
When you are actually paying, either then, or when you have
passed your general entry there.
Then.
You haven't paid, you have just passed your general entry.
Then.
And the threshold limit is the same.
Rs. 30,000.
See how to see Rs. 30,000.
Read from here.
The limit of Rs.
30,000, that is applicable separately.
It is applicable separately.
This limit is applicable separately for everyone.
This is the crux point of this section.
People don't think that one person cannot pay more than Rs.
There is a lot of confusion in the market regarding this.
But Rs.
30,000, as I say, you don't have to check per person, you
have to check per purpose.
So he is saying that the limit of Rs.
30,000, that is applicable separately for fees of
professional service, fees of technical service, royalty,
non-competing fees.
It implies that, read this, if payment to a person towards
each of the above, that is if less than Rs.
30,000, then no tax is required to be deducted.
Even though aggregate payment is more, there is no problem.
But the payment for different purposes should be less than
Rs.
Sir, this is the summary of this section.
Look at it once.
Professional service is 10%, limit of Rs.
Technical service is 2%.
Generally, 10% rate is there.
Non-competing fees are 10%.
Limit of Rs. 30,000 is separate.
This is an illustration, as I gave you an example.
Rs. 28,000 payment is going to Mr.
Ganesh, towards professional service.
And the second payment is going to Rs.
25,000, on the same day, towards technical service.
Now tell me, the limit of Rs.
30,000, is the payment going above that?
No.
So should there be any TDS, Babu Mushai?
There will be no TDS in that case.
No other payment, so there will be no TDS.
Sir, this was section 194J.
Hope so, your points are being cleared.
194J, TDS and professional services, was the section,
friends.
See you in the next lecture, with a new section.
Thank you very much, friends.