Directors remuneration

This query is : Resolved

KETAN MEHTA (Querist)
Follow

26 June 2013 Dear Experts
If Foreign citizen director holding Person of India Origin card ( free entry & exit in India without visa) can receive the director remuneration from Indian domestic company ? Pl advice.

KETAN MEHTA

KETAN MEHTA (Querist)
Follow

26 June 2013 Further he is resident as per definition of income tax act

KETAN MEHTA

KETAN MEHTA (Querist)
Follow

02 August 2013 Dear Experts
Pl advice

Upgrade to CAclubindia Pro. Subscribe Now!

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
Follow

21 July 2024 Yes, a foreign citizen director holding a Person of Indian Origin (PIO) card can receive director remuneration from an Indian domestic company under certain conditions. Here’s a detailed explanation:

### Director Remuneration for PIO Card Holder:

1. **Residency Status**: If the foreign citizen director qualifies as a resident in India under the Income Tax Act, which typically means the individual has stayed in India for a specified number of days during the relevant financial year, they are considered a resident for taxation purposes. As per the Income Tax Act, a resident is liable to pay tax in India on their global income, including director remuneration received from an Indian company.

2. **Director Remuneration**: Directors of Indian companies, whether they are Indian citizens, Persons of Indian Origin (PIO), or foreign nationals, are eligible to receive remuneration for their services. This remuneration includes salaries, allowances, fees, perks, etc., as provided in accordance with the Companies Act, 2013.

3. **PIO Card Holders**: PIO card holders, as per the guidelines in force during the period when the PIO card was valid, have certain privileges related to entry, exit, and residency in India. The ability to receive director remuneration is not explicitly restricted for PIO card holders, provided they meet the criteria set forth under Indian laws and regulations.

4. **Tax Implications**: Director remuneration received by a resident director (including a PIO card holder who qualifies as a resident) is taxable in India. The company paying the remuneration is required to deduct tax at source (TDS) as per the applicable rates and deposit it with the government.

### Compliance and Documentation:

1. **Board Resolution**: The board of directors of the company should pass a resolution approving the payment of remuneration to the director, including the terms and conditions of such remuneration.

2. **Agreement**: A formal agreement or contract detailing the terms of the director’s appointment, including remuneration, responsibilities, and other conditions, should be executed between the company and the director.

3. **Tax Deduction (TDS)**: The company must deduct TDS on the director's remuneration and issue Form 16A annually, showing the TDS details, to the director.

### Conclusion:

In summary, a foreign citizen director holding a PIO card, who qualifies as a resident under the Income Tax Act, can receive director remuneration from an Indian domestic company. However, it is crucial to ensure compliance with all applicable laws, including tax laws and regulations governing director remuneration. Seeking advice from a qualified tax consultant or legal advisor can provide further clarity based on the specific circumstances of the director and the company.