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Tds on salary to directors

lexbery (d) (227 Points)

13 December 2011

i need a clarification to income of director.

suppose a director earn rs 20,000/- per month as his remuneration in a pvt ltd co,so his total salary for the year will be 240,000/-.

my question is will tds be deducted from the salry?if yes then how it is calculated?

or there is no tds on director's salary he just has to pay according to the tax slab??in this case 10%

do help me on this conufusion

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10 Replies

CA Maulik Rachh (-) (114 Points)
Replied 13 December 2011

Sitting fee received by a director has to be taxed under the head “income from other source “ and not salary.

There is no provision for TDS on sitting fees payment and certainly not u/s 194J of the I T Act

Giridhar S Karandikar (Team Lead) (7543 Points)
Replied 13 December 2011

Calculate the total income from salary after considering the exemptions, PT etc. After that deduct the amount as required u/s 80C, 80D etc..if any.

Calculate the tax after deductions under Chapter VI-A by applying the tax rate as per the respective slab rate. The total tax that would be coming, divide it by 12. This monthly amount should be deducted from the salary of the director by way of TDS.

I don’t think that remuneration paid to the director would be considered as Sitting Fee as pointed out by Mr Rachh.

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lexbery (d) (227 Points)
Replied 13 December 2011

dear mr giridhar,

as said by u after calculating and deducting all the exemptions the amount that comes we divide it by 12,this means all this will be done after 31st march rite??so how can i deduct tds monthly as deduction and all will be known only after end of the financial year.

Giridhar S Karandikar (Team Lead) (7543 Points)
Replied 14 December 2011

Dear lexberry, while calculating TDS on salary, we are required to take from the employee the amount of investments he will be making during the year at the beginning of the year & consider the tax payable accordingly. In this way the total tax payable for the year is divided by 12 & TDS made each month.

Now if the employee submits any additional proofs of investments in the subsequent month(s) during the year, then again the total income less the total investments will be computed & TDS made accordingly for the remaining part of the year.

So in this way TDS is being calculated throughout the year and the Form 16 will be prepared accordingly.

lexbery (d) (227 Points)
Replied 14 December 2011

sir please read mi question...its a pvt ltd co,eg i beign the director in the pvt ltd co.

N.N.RAJAN (PROFESSIONAL) (243 Points)
Replied 14 December 2011

The answer by Mr. Giridhar is correct. The director has to be treated like as any other employee and tds deducted accordingly. The deduction ofcourse need not be exactly divided by twelve and depends upon the decision of the concerned director. i.e., He may opt for lower deduction in earlier months and higher deduction in later months. Care should however by taken by the HR Manager that while deducting tds on salary in later months, salary should be available for deduction. It should not result in paying back of the tds amount by the director concerned.