Directors remuneration

This query is : Resolved 

23 March 2012

As per Union Budget 2012. It has been announced that Directors Remuneration will attract the provisions of sec.194j.Then the Remuneration received by The Directors Taxable under The Head Income From Business or Profession(as per 194j-professional services).

Or the remuneration received by the director taxable under the head salary.

If the directors remuneration is taken under the head Business or profession.

Then whether it is compulsory to make tax audit for directors if income exceeds tax audit limit u/s 44AB of Rs. 25 lakhs.

CA Nikhil Jhanwar (Expert)
23 March 2012

TDS will be deducted under section 194J only on the amount which is in the nature of salary, normally remunreation is given as a salary, only for part time directors this provision has of much relevance, but if audit limit is crossed then liable for it.

B.Chackrapani Warrier (Expert)
23 March 2012

i) If tax is deducted under section 192, the concerned Director has to offer the income under the head 'income from salary' and has to file the return accordingly.
ii) If tax is deducted under section 194J (courtesy to Finance Bill 2012), return has to be filed by the said Director offering the income under the head "Income from business/profession" and if such professional income exceeds the limits of 44AB, tax audit also becomes mandatory.
Therefore, selecting the section of tax deduction needs judgement after analyzing the underlying facts of the appointment.

pankaj jaiswal (Querist)
24 March 2012

dear nikhil Bhaiya

tds u/s 194j is deducted for Professional/Technical charges/Royalty & Non-compete fees.

but you have mentioned as salary.

will you please clear about it as well as for part time director.

B.Chakrapani Warrier has given a very good point of recognition of remuneration under the head salary or PGBP for proper planning.

please clarify


CA Nikhil Jhanwar (Expert)
24 March 2012

I am very sorry Its my Mistake, I was intended to write as 'which is not in the nature of salary'.....Pls. correct it....

Thanks B. Chackrapani Sir for your advice.

As regards, part time director remuneration given to them is not for engaging in day to day work and normally they are not employee of Company, in that case TDS will be deducted under Section 194J. As per opinion, in this Budget it is just a clarification, even before, this treatment would have been made.

pankaj jaiswal (Querist)
26 March 2012

Thank You Nikhil Bhaiya .... Thanks a lot for your Proper Guidence.....

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