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Accounting of incentives to professionals

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Querist : Anonymous

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Querist : Anonymous (Querist)
29 October 2011 Dear Experts,

My company is a engineering consulting co. and have some hired Engg professioals apart from Engg professional on the company rolls.The distinction is mainly from Income Tax purpose. The hired professonals are paid professional fee which is subjected to 10% TDS. The professional on the rolls of the co. are paid salary and TDS is calculated as per applicable TDS rules relevant to salary.Recently, our company declared Diwali bonus (not part of CTC)and as such the expense is booked under Bonus ex-gratia head so far as the payment to employees were concerned.How, the payment made on account of Diwali Bonus to hired professional should be treated in book of accounts:
a)As Diwali Bonus Exgratia & TDS of 10% to be deducted?
b)As a professional fee and 10% TDS to be deducted?
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CA Siddhartha Bhardwaj

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CA Siddhartha Bhardwaj (Expert)
14 May 2012 It is better to show it as professional fees.
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