TDS on sitting fees

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This query is : Resolved

Ramasubbu K (Querist)

05 October 2007 Whether sitting fees payable to directors falls under TDS provisions. If yes, under which Section of IT Act. Whether under 192 or 194J. If it is under above sections under what circumstances. Please substantiate with circular or judgements etc.

R.V.RAO

R.V.RAO (Expert)

06 October 2007 THE QUESTION OF INVOKING SEC.192 ARISES ONLY WHEN THERE IS AN APPOINTMENT LETTER OFFERING SALARY OR A CONTRACT OF EMPLOYMENT FOR SALARY.
LET US PRESUME FROM YOUR QUESTION THAT THERE IS NO SUCH APPOINTMENT OR CONTRACT TO EMPLOY THE DIRECTOR FOR A SALARY.
THEN THE QUESTION COMES IN WHAT CAPACITY HE RENDERS SERVICES TO THE COMPANY?
OBVIOUSLY ANY ONE WILL SAY PROFESSIONAL CAPACITY.THEN WHICH PROFESSION?
FOR THE PURPOSE OF SEC 44AA, SPECIFIED PROFESSIONS ARE DEFINED. WHATEVER DOES NOT FALL INTO THAT CATEGORY IS A NON SPECIFIED PROFESSION.
SO WE CONCLUDE SITTING FEES PAYABLE TO A DIRECTOR SERVING A COMPANY IN HIS PROFESSIONAL CAPACITY FALLS UNDER 194 J FOR TDS APPLICABILITY @10.30% PROVIDED IT EXCEEDS RS. 20000 P.A .
UNDER SEC 309 OF COMPANIES ACT ALSO, REMUNERATION PAYABLE TO DIRECTOR FOR RENDERING SERVICE IN PURE PROFESSIONAL CAPACITY SHALL NOT BE CONSIDERED FOR RECKONING OVERALL MANAGERIAL REMUNERATION
(SUBJECT TO A FEW CONDITIONS).
R.V.RAO

Ramasubbu K

Ramasubbu K (Querist)

06 October 2007 Section 44AA precribes the list of profession. But the directors sitting fees is payable only for attending board meetings even if he has not contributed anything in the meeting. So how come the fees be treated under Section 194J for TDS