Commision on sales

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Shankey Garg (Querist)
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17 June 2013 Whether commission paid to directors on sales on yearly basis is a part of salary or not?
And what is the procedure for deduction TDS on this commission?
Whether service tax is applicable on this commission or not?

CA Kapil Verma

CA Kapil Verma (Expert)
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17 June 2013 Yes Is part of salary , and deduct TDS u/s 192.

refer link
https://taxmantra.com/tds-on-remuneration-paid-to-directors-us-194j1ba/

Shankey Garg

Shankey Garg (Querist)
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17 June 2013 In My query TDS should be deducted on monthly basis or yearly basis?

Shankey Garg

Shankey Garg (Querist)
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17 June 2013 What is the procedure for calculation of leave encashment?

Shankey Garg

Shankey Garg (Querist)
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17 June 2013 As 11 of foreign exchange is applicable on creditors or not?

Ganeshbabu K

Ganeshbabu K (Expert)
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17 June 2013 1)as soon as the clause (1)(ba) introduced in Section 194J, it becomes mandatory for all the companies to deduct TDS @ 10% on sitting fees, commission paid to directors other than whole time directors and managing directors.

2)for whole time directors/managing directors tds as per 192 (salaries)

3)If salary it can be payable as per salary..on yearly..

4)if it is 194J it can be payable on basis of monthly..as and when 194J threshold limit exceeds

5)Yes..As per AS11 you need to re-state foreign creditors as per exchange rate as on 31st march 2013

Thanks & regards
Ganesh babu k

Ganeshbabu K

Ganeshbabu K (Expert)
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17 June 2013 Reverse charge on remuneration to directors:-

1)It depends on relation between directors and company.Once there is employer-employee relation, mode of payment will not alter the nature of service.

2)CBE&C, vide letter No. 324/Comm(ST)/2008 dated 1-12-2008 [20 STT 20 (St)], has clarified that commission paid by company to its directors (even if linked with performance or with financial results of the company) is nothing but remuneration paid by employer to employee.

3)The relationship between employer and employee is distinct from relation between a service receiver and service provider. Hence, so long as activities performed are duties within the framework of terms of employment, amount paid by employer to employee, even if termed as commission, would not be treated as commission under definition of Business Auxiliary Service and service tax would not be leviable.

4)This view has been reiterated and confirmed vide CBE&C circular No. 115/09/2009-ST dated31-7-2009.

These clarifications would apply even under new provisions w.e.f. 1-7-2012.

Hence, if there is employee-employer relation, then there is no service tax and hence no question of reverse charge can arise.

Thanks & regards
Ganesh babu k

Shankey Garg

Shankey Garg (Querist)
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17 June 2013 Thanks sir

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