TDS

This query is : Resolved

Share Report Follow Query Ask a Query

Querist : Anonymous

Querist : Anonymous (Querist)

05 April 2011 Under which section TDS will be deducted on payment of commission to INDEPENDENT DIRECTORS?

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
Follow

05 April 2011 TDS to be deducted u/s 192 i.e. TDS on Salaries.

Querist : Anonymous

Querist : Anonymous (Querist)

07 April 2011 Even if he is the independent and non executive director.

Could you please help me with a case law or circular on the same

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)
Follow

27 July 2025 For TDS on commission paid to **Independent Directors (non-executive)**:

* 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).

---

### 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.

---

### 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.

---

### 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 |

---

If you want, I can help draft an official note with references for your records or communication. Would you like that?

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now