booking of different accounts

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

17 January 2010 In the previous year few marketing executives were employed and their salaries were booked under the head salaries. This year a marketing consultant was engaged to market the company item and all the previously employed marketing executuves were transferred to that company who took them into his fold. This year that expenditure is booked under Advertisement. Is it correct or should the expenditure be booked under salaries. The result is that this year the salary expdtr. is less and advertisement expdtr is more. Is it correct. Kindly guide.
Thanks for the answer. Should I deduct 10% or 1% TDS from the total gross payments made to the consultants and his executives. kindly clarify this point also

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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17 January 2010 If you are paying the salary to the executive on behalf of the consultant you have to book the expenses under the consultancy

Rahul Vora

Rahul Vora (Expert)
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18 January 2010 If you have hired a marketing consultant, then the amount paid to the consultant has to be accounted as consultancy charges and not advertisement expenses. So, if you pay salary on behalf of the consultant then such expenses are to be shown as consultancy charges. It is OK even if your salary expenses goes down as compared to the previous year as you have a genuine explanation for the same.

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Querist : Anonymous

Querist : Anonymous (Querist)

18 January 2010 If it is to booked under consultancy charges, then should deduct 10% or 1% TDS on the total gross payments made to Constltant and his executives. Kindly clarify

Querist : Anonymous

Querist : Anonymous (Querist)

18 January 2010 If it is to booked under consultancy charges, then should deduct 10% or 1% TDS on the total gross payments made to Constltant and his executives. Kindly clarify

Rahul Vora

Rahul Vora (Expert)
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19 January 2010 As per my opinion, it will be at 10%

Querist : Anonymous

Querist : Anonymous (Querist)

19 January 2010 Another clarification: It is an advertising consultant, who will advertisement about the company and its objectives to students for overseas education. Will it still constitute consultancy or advertising agency because for adverttisement it is 1% TDS since the consultant is insisting on deducting TDS only 1% stating he is not marketing goods but advertising a overseas education company. Kindly clarify

Querist : Anonymous

Querist : Anonymous (Querist)

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Rahul Vora

Rahul Vora (Expert)
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19 January 2010 As per my opinion, you have to deduct TDS @1% incase you give any advertisement. In your case, it seems that the person will be working as a consultant.
Below is the extract to explanation to Sec.194J as to what does a professional mean,

Explanation.For the purposes of this section,

(a) professional services means services rendered by a person in the course of carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or advertising or such other profession as is notified10a by the Board for the purposes of section 44AA or of this section;

(b) fees for technical services shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9;