Yes GST will apply and unde income tax it will be charged under income from business and profession
Dear Sir, My client provided financial and accounting services to Private Limited Cos for 11 yrs. TDS was deducted by cos u/s 194J Now the company is paying a certain amt to the client as Compensation to maintain confidentiality of the information received during the service. Will GST be applicable against this amt ? Against what head the income be charged to tax as per income tax
Since, TDS has been deducted U/S 194J, it is to be treated as professional services and to be shown under the head Income from business and profession. If it exceeds Rs 20 lakhs limit, GST is applicable
Dear sir,
In reference to your query please note that the said compensation seems to be classifiable under Schedule II, clause 5(e) as "agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act;" against which consideration is being received.
This transaction therefore constitutes a supply, and is therefore very much exigible to GST.
In so far as head of income under Income tax law is concerned, the same being of business nature would be chargeable under the head of PGBP.
Please advise in case of any further clarifications.
Thanks & Regards,
CA Aditya Dhanuka.
Hello Dear,
If the annual turnover of the client exceeds the threshold limit of Rs. 20 lakhs, then they would be required to register for GST and pay GST on the compensation amount received for maintaining confidentiality.
TDS has been deducted under section 194J of the Income Tax Act, then the income received by the client would be treated as income from the provision of professional services, and it should be shown under the head "Income from Business and Profession" in their income tax return.
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Shubham Goyal
https://www.linkedin.com/in/ca-shubham-goyal-7b15491a2/
- Under GST it is taxable
- Under Income tax it is taxable under the head "Profits & Gains from business or Profession"
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Is the company paying an amount just for maintaining confidentiality?
This will be income and I think GST and income tax shall be charged.
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