T.D.S on conveyance of directors

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Suresh M.Moolya (Querist)
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12 May 2010 Generally whenever we make a payment to the board of directors towards conveyance and meeting attendance fees for attending meetings, we deduct t.d.s at the rate of 10% u/s 194j on conveyance chgs.

Are we liable to deduct t.d.s on both the meeting attendance and conveyance fees paid to directors for attending the meeting?

If we are liable for deducting, then at what percentage should we deduct the t.d.s on the fees paid to them?

Please guide me in this matter. Looking forward to your reply.

taxindiaconnect

taxindiaconnect (Expert)
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13 May 2010 194J. (1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any sum by way of-
(a) --------or
(b) fees for technical services,
(c) --------------
The section defines the meaning of professional services and technical services as following
For the purposes of this section,-
(a) "professional services" --------------------
(b) "fees for technical services" shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9 ;

Explanation 2 to clause (vii) of sub-section (1) of section 9 defines the fess for professional services as following -
For the purposes of this clause, "fees for technical services" means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head "Salaries".

A director on the board is responsible for managing the day to day affairs of the company, thus his service are either of consulting nature or of managerial nature which fall with the meaning of fees for technical services for the purpose of section 194J as defined in Explanation 2 to clause (vii) of sub-section (1) of section 9 ( produced above). Accordingly the provisions of section 194J apply to for TDS purpose on sitting fees to directors and TDS is required to be deducted @ 10%

On your second query regarding TDS on reimbursements of travel expenditure, if the travel expenditure are supported back to back by the original bills / ticket, no TDS required, otherwise deduct TDS on the entire amount reimbursement @ 10%.

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