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.
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.