TDS
Querist : Anonymous
Querist : Anonymous
Could you please help me with a case law or circular on the same
* Generally, payments to directors for sitting fees or commission are considered **“Income from Other Sources”** or sometimes treated as **“Profits and Gains of Business or Profession”**.
* If the director is not in the company’s payroll and not receiving salary, TDS is **not under Section 192 (which is for Salary)** but under **Section 194J** (Fees for Professional Services).
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### Key points:
* **Section 192** applies **only if director is a salaried employee** (executive director).
* For **independent or non-executive directors**, commission or sitting fees are not salary; thus, TDS applies under **Section 194J** at the rate of 10% (on fees for professional services).
* However, if commission is paid as per the **Companies Act and linked with profit sharing**, it could be treated differently, but generally, TDS on director’s commission falls under Section 194J.
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### Circulars & Case Laws:
* **CBDT Circular No. 715 dated 07.11.1993** clarifies that payments to directors for professional services are covered under Section 194J.
* Various judicial decisions, like in the case of **CIT v. Shriram Industrial Enterprises Ltd.** (1996), have supported TDS under Section 194J on directors’ commission if they are not salaried.
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### Summary:
| Payment to Director | Applicable TDS Section | Comments |
| ------------------------------------------------------------- | ---------------------- | ---------------------------------------------- |
| Executive Director (Salary) | Section 192 | TDS deducted as salary |
| Independent/Non-executive Director Commission or Sitting Fees | Section 194J | TDS deducted on fees for professional services |
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