Liaison Office - under Income tax - provisions

Sameer always normal provision attracts in this kind of cases 194j

I am working in Parneship Firm. We pay bonus & Ex-Gratia in diwali in A Y 2008-2009 diwali in october but i made provision of bonus & Ex-gratia which was unpaid amount till last date of return filling i.e. 30-9-2008. But our consultant says this bonus & ex-gratia amount paid before last date of return filling. What can i do? Please tell me about provision with reference my problem?

I am working in Parneship Firm. We pay bonus & Ex-Gratia in diwali in A Y 2008-2009 diwali in october but i made provision of bonus & Ex-gratia which was unpaid amount till last date of return filling i.e. 30-9-2008. But our consultant says this bonus & ex-gratia amount paid before last date of return filling. What can i do? Please tell me about provision with reference my problem?

Dear Tousifahmed!!

I hope your problem centres around the provisional entry made in the books regarding bonus & ex-gratia amounts before 30.09.2008 and its effect in the recovery of TDS.

The payment referred is salary and the same becomes txable when it is paid  or accrued whichever is earlier. The TDS provisions are also very clear to include such a situation as liable for TDS. TDS is attracted at the time of payment or credit of the amount whichever is earlier. Even credit of the amount to a 'Suspense Account' is not spared.

Good Bye!! Cheers!!

Hi,

We are looking for opening up a liaison office in Mumbai. Can you tell if salary paid to professionals hired will be taxed or not? Also, do we need to register the liaision office with Registrar of Companies also? Also, does the Liaison office needs to have a separate name?

Thanks

Hi Vikash,

1. Salary paid to Professionals hired for Liaison Office is taxable under the Income Tax Act - TDS (194J)

2. Liaison Office along with the RBI, needs to be Registered with the ROC - NCT Delhi and Haryana and with the ROC - Mumbai within 30 days of establishment by way of Form 44 (Source - Section 592(i) of the Act)

3. Liaison Office does not need to have a separate name, it will just continue as the Parent Company name along with 'Liaison Office'. For example - Parent company incorporated in USA is 'Gilly Inc', then the Liaison company named in India will be - 'Gilly Inc - Liaison Office'.

Regards,

Bhavik

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