Directors salary

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

22 October 2011 Dear sir

Is there any prohibition of any kind on the amount of salary that can be paid to a director by a company under any law?

Also, please mention if any special resolution by the shareholders or any permission from the government is required if the salary exceeds any amount?

Eg: if a company has 2 directors and it is paying one of the directors following MONTHLY salary:

Basic- Rs. 69,200/-p.m.
Transport All.- Rs. 800/- p.m.
HRA- Rs. 20,000/-p.m.

Is there any problem?

CA PRAVIN

CA PRAVIN (Expert)
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22 October 2011 In case of private limited company there is no restriction on payment of salary to its directors.

In case of Director of Public limited company-----

1] If Director is appointed as per SCH 13, then remuneration should be within parametres of Sch 13.

2] If appointment is with reference to central Govt approval then remuneration is subject to section 198.

Querist : Anonymous

Querist : Anonymous (Querist)

22 October 2011 so it means that we are free to pay as much salary as we want and we can structure it as per our wishes so as to minimize the liability of tax?