taxability of Director remuneration
This query is : Resolved
25 May 2010
Why Director remuneration taxable under head Salary
Sec. 15 of Income tax Act, Income taxable under the head salaries only if there exists employer & employee relationship between the payer & payee.
Sec. 2(13) of Companies Act – meaning of Director – Director as such are not employer or servant of the company .
Sec. 56(2) of Income tax Act, specific Income chargeable under the head “Income from other sources “ include Director Fee .
As per above point Why Director remuneration taxable under head “Income From salaries”. Why not Income chargeable under the head “Income from other sources”
Sec. 15 of Income tax Act, Income taxable under the head salaries only if there exists employer & employee relationship between the payer & payee.
Sec. 2(13) of Companies Act – meaning of Director – Director as such are not employer or servant of the company .
Sec. 56(2) of Income tax Act, specific Income chargeable under the head “Income from other sources “ include Director Fee .
As per above point Why Director remuneration taxable under head “Income From salaries”. Why not Income chargeable under the head “Income from other sources”
25 May 2010
director are the employees of the co. therefore, their payment is liable for tds u/s 192.
CA Ravi Sisodia
(Expert)
25 May 2010
yes liable for tds u/s 192.
26 May 2010
AGREE SEC 192 IS ATTRACTED.
26 May 2010
Ok I also agree with you ...........
but not satisfy in absence of specific provision, sec. ect …..
pls specify specific provision, sec. ect ….. fo your answer. ………
but not satisfy in absence of specific provision, sec. ect …..
pls specify specific provision, sec. ect ….. fo your answer. ………
CA Kishore Tallam
(Expert)
26 May 2010
We should make a clear distinction between remuneration paid to Managing/Whole Time directors and Non executive/Independent Directors.
As per companies act, MD and WTD are considered as employees only.
Hence, whatever remuneration is paid to them is included in Salary cost of the company and disclosed in notes on accounts and is taxable in their hands as "Salary Income".
Whereas if any remuneration is paid to directors other than MD/WTD, the same is shown as an expense in the financials and shall be taxable as Income from other sources in the hands of directors.
As per companies act, MD and WTD are considered as employees only.
Hence, whatever remuneration is paid to them is included in Salary cost of the company and disclosed in notes on accounts and is taxable in their hands as "Salary Income".
Whereas if any remuneration is paid to directors other than MD/WTD, the same is shown as an expense in the financials and shall be taxable as Income from other sources in the hands of directors.
CA Kishore Tallam
(Expert)
26 May 2010
We should make a clear distinction between remuneration paid to Managing/Whole Time directors and Non executive/Independent Directors.
As per companies act, MD and WTD are considered as employees only.
Hence, whatever remuneration is paid to them is included in Salary cost of the company and disclosed in notes on accounts and is taxable in their hands as "Salary Income".
Whereas if any remuneration is paid to directors other than MD/WTD, the same is shown as an expense in the financials and shall be taxable as Income from other sources in the hands of directors.
As per companies act, MD and WTD are considered as employees only.
Hence, whatever remuneration is paid to them is included in Salary cost of the company and disclosed in notes on accounts and is taxable in their hands as "Salary Income".
Whereas if any remuneration is paid to directors other than MD/WTD, the same is shown as an expense in the financials and shall be taxable as Income from other sources in the hands of directors.
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