16 September 2014
Ours is a private limited company of two directors. We have paid to directors Total Rs 4,00,000/- Rs 2,00,000/= each on account of salary to directors. Further we want to pay their professional charges of Rs 2,00,000/= Rs 1,00,000/= each. Can we do so. We will pay tds and revise the tds return Pls guide me
17 September 2014
Tushar they are already being paid salary. So they are not independent/non-executive directors but the directors on the payroll of the company.
17 September 2014
you did not understand my question...if they have seperate prof firm and they give professional fees to them then still it will be clubbed in salary even if sec 194J is applicable.
17 September 2014
sorry. if the payments are made to a separate entity, then the question of clubbing become infructuous. In this case, the payment is being made to directors individually, so such payments will be clubbed in salary only.
17 September 2014
then u have not read the 2 n 3 line of querry which says " further we want to pay for profeesional charges to them..." which means that they are asking for separate fees and thats y question of tds came which will be dedcuted u/s 194J
17 September 2014
yes i read the query. and that is why i said that even professional fees paid in addition to director (who is receiving salary from the same company), it will be covered under salary only. that is why i said refer 17(iv)
17 September 2014
and u mean to say that only tds deducted will be u/s 192 then ur wrong as in my co only this is the case and they deduct under sec 192 and 194J sep as 1 of reputed ca is also director of co
17 September 2014
well just because somebody is doing it wrong, doesnt make any difference to the law as it stands. The logic is simple...if the director is independent director/non-executive director, then payments made will be covered under 194J. If the director is executive director, then payments will be covered under salary.
section 17(iv) provides that any fees paid to an employee (which would include executive directors) is covered under salary.
192 is governed by section 17. 194J is governed by section 28. if a payment is not covered 28 then it cannot be covered under 194J. So you dont read section 192/194j to decide which section will apply...you read the governing sections ie heads of incomes.
And if all the CAs were doing the things right way, there wont be so many cases pending at various appellate levels and we will be a country happy with much larger tax revenues :)
17 September 2014
i am not concerened with the country or appeals when a ca is also a practicing ca and a director who is iisuing profesisonal bill for providing professional services then sec 17 will not apply in any case sec 28 is applicable and this has been accepted by it dept since many years of our director and both are correctb in my view
17 September 2014
please read the whole query again and then apply your case to it.
a practicing CA will never receive salary from the company where he is a director. he will hold position as a non-executive/independent director and for his services receive professional fees. (this is your case)
in the query here, the director is receiving salary already. so he is not an independent director or a non-exec one. He is an executive director. So, section 17 is already in play. this is the diff between your case and this case.
17 September 2014
he can be a director but not the executive director. he can only receive sitting fees (as he can only hold position of a director simplictor.)