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Tds on director remuneration (Income Tax)

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This query is : Resolved

Author : Anonymous

( Author )
20 April 2012

A private Limited company having two director and company decided to give director remuneration to male director Rs. 150000/-pm and female director Rs. 125000/-pm(yearly for male Rs. 1,80,000/- and female Rs. 15,00,000/-).
What is TDS laibility for above remunaration? Under which section TDS will be deduct(as per changes in budget). Please guide. It’s urgents.



CA Dileep Surya Kumar

( Expert )
20 April 2012

The remuneration, received by a director is taxable as 'Income from salaries' or not, would depend upon whether the director is an employee of the payer or not. This can be determined from the nature of the relationship between the director and the payer. If the relationship of a master and servant exists between the payer and payee, then the director would be an employee and the remuneration that is received would be taxable under the head 'salaries'. However, if such relationship does not exist, then the director will not be considered an employee of the payer and the Income would be taxable as Professional Income.


Any income which is chargeable under the head salaries, tds should be made at applicable rate u/192, for this purpose you need to obtain details like other income details, savings receipts (lic, Fds etc),rental receipts etc..


However under recent budget new clause 1(ba) introduced in section 194J which mandates to deduct TDS @10% on any amount paid to the directors( i.e sitting fees, commission etc),for any amount covered under 192 this clause shall not apply.



CA PRAVEEN SINGH

( Expert )
20 April 2012

REMUNERATION PAID TO DIRECTOR,TDS IS TO BE DEDUCTED U/S 192.
ANY COMMISSION & SITTING FEES PAID TO DIRECTOR.TDS DEDUCTED U/S 194J.AS PER NEW AMENDMENT.


Ajay Mishra

( Expert )
20 April 2012

Hi

Yes, agree with expert, go to the following link for more details:

http://www.caclubindia.com/articles/tds-on-remuneration-paid-to-directors-13422.asp


CA Kishore Tallam

( Expert )
20 April 2012

If it is salary, it will be sujected to TDS u/s 192 and if it is other than salary as per Budget, u/s 194J.


Ajay Mishra

( Expert )
20 April 2012

Hi

Budget 2012 inserted a new clause 1(ba) in section 194J which mandates TDS @10% on any remuneration paid to directors of a company. This clause will be effective from 01.07.2012.

The newly inserted clause (1)(ba) of 194J read as under:

Any remuneration or feeor commission by whatever named called, other than those on which tax is deductible under section 192, to a director of a company shall liable to be deducted @10%.

Please note that newly inserted clause covers any remuneration paid by whether by way of fee or commission or by any other name and such payments shall be subject to TDS @ 10%.


Regards


CA Kishore Tallam

( Expert )
20 April 2012

Yes. If any remuneration / fee (including sitting fee) paid to other than WTD, MD, ED, then it will be covered in this new amendment.


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