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Directors' salary

Company Secretary & Compliance Officer

Earlier Director Remuneration paid by company is being treated as Salary under section 192, but now after budget 2012, Director Remuneration will be covered under section 194J and TDS will be deducted @ 10% under Fee for professional or technical services under section 194J.

Under the existing provisions of the Income-tax Act, a company, being an employer, is required to deduct tax at the time of payment of salary to its employees including Managing director/whole time director. However, there is no specific provision for deduction of tax on the remuneration paid to a director which is not in the nature of salary.

It is proposed to amend section 194J to provide that tax is required to be deducted on the remuneration paid to a director, which is not in the nature of salary, at the rate of 10% of such remuneration.

The above change will be in case of non executive directors remunerations i.e. not in the nature of Salary.


The remuneration paid to WTD/MD which are in the nature of salary are continue to be treated as salary. However, as earlier there was no separate provision for the treatment of remunerations paid to directors which are not in the nature of salary and thus it also included in the salary.


Now there is a separate provision and all the above remuneration paid to directors which are not in the nature of salary are to be covered under 194J and TDS will be deducted @ 10%.

This amendment will take effect from 1st  July, 2012.

 


Total thanks : 6 times

 
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Chartered Accountant


Any kind of remuneration paid to non executive director will be considered under 194J?

What will be treatment of sitting fees paid to WTD/MD/executive director (192B or 194J)?

Thanks

 

 
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Company Secretary & Compliance Officer

Dear Vipin, Sitting fees is paid to the Non Executive Director.


Total thanks : 1 times

 
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head of Audit and tax


As director remuneration is now covered under 194 J that is Professional and with introduction of negative list of Service for Service tax

  1. Can we interpret as 194 J applies, so there is no Employer –Employee relation so Service tax is applicable.
  2. Same way Tax audit U/s 44AB is also applicable

 
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@ CS Ankur Srivastava
I was searching this information for my sister as she has been changed her job and she wanted to know these things. She wanted to know about TDS deduction and this is really great that I could find this information here.


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Company Secretary & Compliance Officer

Its really my plasure Harsh ji....

 
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While filing his return, post budget ,under which head the director will show his directors remuneration whether salary or professional? pl clarify

 

 
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Mr. ankur

If a ABC company has substantial shares in XYZ company and it appoints his employee (X) as an executive director in xyz company. As an executive director (X) gets sitting fees, so whether that sitting fees paid to (X) can be claimed by the abc company ?

Is there any legal instance on this situation where the appointer got the sitting fee insted of the executive director ?

Please Clarify as soon as you can.

Thank you

 
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Company Secretary & Compliance Officer

Your question is Wrong Puneet.

 

A person can be in full time employment in only one Company. So Mr. X who is an employee of ABC Company can not be appointed as executive Director in XYZ Company.

 

Secondly sitting fee is paid to Non Executive Directors of the Company for attending the meetings of the company.

 
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Dear Ankur ji

 

What treatment i have to do on payment to director which was made before 01 july 12 a sum of rs 120000 only .I have to deduct tds as salary or professional

 

 

 
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