Directors remuneration

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

31 January 2015 Hi Sir,
I Have one doubt.
Can A director of Private Ltd. Co. get remuneration as well as professional fees?
The said pvt. ltd. co. was in education sector, and earlier director was providing the coaching also in the same company and as of now he is looking only after administration part of the same company?

As of now we are paying both salary as well as professional fees? Is this proper??
Please guide.

Querist : Anonymous

Querist : Anonymous (Querist)

31 January 2015 Also the said pvt. company is subsidiary of listed company

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)
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21 July 2024 Yes, a director of a Private Limited Company can receive both remuneration (salary) and professional fees, subject to certain conditions and approvals:

1. **Remuneration (Salary)**:
- **Purpose**: Remuneration is typically paid to directors for their role in managing the affairs of the company. It includes regular salary, allowances, perks, etc.
- **Conditions**: The remuneration should be approved by the Board of Directors and should comply with the provisions of the Companies Act, 2013. For private companies, the remuneration is subject to the limits prescribed under Schedule V of the Companies Act, 2013.

2. **Professional Fees**:
- **Purpose**: Professional fees are paid for specific professional services rendered by the director beyond their regular duties as a director. This can include services like consultancy, advisory, coaching, or any other specialized services.
- **Conditions**: The payment of professional fees should be clearly documented in an agreement or contract specifying the nature of the services, terms of engagement, and the fees payable. The fees should be reasonable and commensurate with the services provided.

3. **Compliance and Approval**:
- **Board Approval**: Both the remuneration (salary) and the professional fees should be approved by the Board of Directors through a resolution. The resolution should specify the details of the remuneration package and the professional services to be rendered.
- **Schedule V Compliance**: If the company is a subsidiary of a listed company, any remuneration paid to directors should comply with the limits prescribed under Schedule V of the Companies Act, 2013. This schedule specifies the maximum permissible limits for remuneration payable to directors of private companies.

4. **Tax Implications**:
- **TDS Deduction**: The company is required to deduct TDS (Tax Deducted at Source) on both remuneration and professional fees as per the Income Tax Act, 1961.
- **Tax Planning**: Directors should also consider the tax implications of receiving both types of payments, ensuring compliance with income tax laws and regulations.

### Conclusion:
In your case, where the director was initially providing coaching services along with administrative duties, and now focuses solely on administration while receiving both remuneration and professional fees, it is important to:
- Ensure that the payments are approved by the Board of Directors.
- Document the nature of services provided for professional fees.
- Comply with the limits and provisions of the Companies Act, 2013, especially since the company is a subsidiary of a listed company.

Consulting with a qualified accountant or legal advisor can provide further guidance tailored to the specific circumstances of your company and its directors.

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