what kind of expense a DIRECTOR of co. can claim ?
This query is : Resolved
21 August 2010
sir
When a director recd. Commission from co. And he is not an employee of the co., he can show this income either as other sources income or business income
Now, my question is how can a director show his income as business income & if he is showing then what kind of expenses he can claim as deduction ?
When a director recd. Commission from co. And he is not an employee of the co., he can show this income either as other sources income or business income
Now, my question is how can a director show his income as business income & if he is showing then what kind of expenses he can claim as deduction ?
21 August 2010
There can be a number of expenses that can be claimed, such as :
Vehicle running exp
Travel exp
telephone exp etc...
Vehicle running exp
Travel exp
telephone exp etc...
21 August 2010
if a director gets salary, then this is the remuneration for all his efforts naa i.e he can not claim the expenses naa as stated above
& in case of director income treated as business income
Does this is the remuneration for all his efforts or not ?
& how can be the income charged as business income in place of other sorces income
& in case of director income treated as business income
Does this is the remuneration for all his efforts or not ?
& how can be the income charged as business income in place of other sorces income
21 August 2010
if a director gets salary, then this is the remuneration for all his efforts naa i.e he can not claim the expenses naa as stated above& in case of director income treated as business incomeDoes this is the remuneration for all his efforts or not ?& how can be the income charged as business income in place of other sorces income
22 August 2010
Sec.192 - The Director and also employee of the company and the relationship of employer and employee, then what ever payment to director need to consider as salary income, the commission also treated s part of salary income
22 August 2010
sir
Commission recd by a Director from a co. Is salary if the Director is an employee of the co. If, however, the director is not an employee of the company, the said commission can not be charged as salary but has to be charged either as income from business or as income from other sorces depending upon the facts.
Commission recd by a Director from a co. Is salary if the Director is an employee of the co. If, however, the director is not an employee of the company, the said commission can not be charged as salary but has to be charged either as income from business or as income from other sorces depending upon the facts.
23 August 2010
If the commission paid to a director (not being employee) need to be treated as Income from other sources
25 August 2010
sir,
The income received to director,not an employee,can be either treated as other sources income but..after satisfying some conditions it will be treated as business income.
The condition may be substantial interest in the company but m not sure.
So i want to know the conditions and also the expenses which can be claimed against the receipt of commission(as this is the remuneration against his efforts), therefore m also not sure can he clain normal expenses(like telephone exp. etc)or only special expenses
The income received to director,not an employee,can be either treated as other sources income but..after satisfying some conditions it will be treated as business income.
The condition may be substantial interest in the company but m not sure.
So i want to know the conditions and also the expenses which can be claimed against the receipt of commission(as this is the remuneration against his efforts), therefore m also not sure can he clain normal expenses(like telephone exp. etc)or only special expenses
03 August 2025
Great question! Here's a detailed explanation regarding income and expenses for a Director who is not an employee but receives commission from the company:
Income Classification for Director’s Commission (Not an Employee)
If Director is an Employee:
Commission paid is treated as salary income under Section 17(1) of the Income Tax Act.
No expenses can be claimed separately because salary income is taxed on a gross basis.
If Director is NOT an Employee:
Commission received can be treated either as:
Income from Other Sources (most common)
Business Income / Professional Income (only if the director has a business or profession, and the commission relates to such business/profession)
When can it be treated as Business Income?
Director must be carrying on a business or profession independently (for example, a consultant director or a professional rendering services).
The commission is related to such business or profession.
The director must have a substantial interest or control in the company (usually ownership of at least 10% shares is considered substantial, but no hard rule).
The commission income is regular, organized, and in connection with the director's business activity.
If these conditions are met, commission can be shown as business income.
Expenses that can be claimed (if treated as Business Income)
Since business income allows deduction of expenses, the director can claim expenses wholly and exclusively incurred to earn this commission, for example:
Telephone expenses related to company/business calls
Travel expenses incurred for attending meetings, company-related work
Vehicle running expenses if vehicle used for business purposes
Office expenses (stationery, internet, etc.) used for director-related business activity
Professional fees (like legal, consultancy) related to business
Any other expenses that can be justified as related to earning commission
If treated as Income from Other Sources
No expenses are allowed except interest paid on borrowing related to earning this income (Section 57 of the Income Tax Act).
General expenses like telephone, travel, etc. are NOT deductible here.
Summary Table
Scenario Income Type Expenses Allowed
Director is Employee Salary No expenses allowed
Director not Employee Other Sources Only interest on loan related to income
Director not Employee with Business Business Income / Profession Expenses wholly and exclusively incurred
Practical Notes
Whether the income is business or other source depends on facts & circumstances; documentary proof of business activity and expenses is important.
Directors should keep proper records and bills for expenses claimed if treated as business income.
If commission is regular and the director has other professional/business activity, better to treat as business income to claim expenses.
Income Classification for Director’s Commission (Not an Employee)
If Director is an Employee:
Commission paid is treated as salary income under Section 17(1) of the Income Tax Act.
No expenses can be claimed separately because salary income is taxed on a gross basis.
If Director is NOT an Employee:
Commission received can be treated either as:
Income from Other Sources (most common)
Business Income / Professional Income (only if the director has a business or profession, and the commission relates to such business/profession)
When can it be treated as Business Income?
Director must be carrying on a business or profession independently (for example, a consultant director or a professional rendering services).
The commission is related to such business or profession.
The director must have a substantial interest or control in the company (usually ownership of at least 10% shares is considered substantial, but no hard rule).
The commission income is regular, organized, and in connection with the director's business activity.
If these conditions are met, commission can be shown as business income.
Expenses that can be claimed (if treated as Business Income)
Since business income allows deduction of expenses, the director can claim expenses wholly and exclusively incurred to earn this commission, for example:
Telephone expenses related to company/business calls
Travel expenses incurred for attending meetings, company-related work
Vehicle running expenses if vehicle used for business purposes
Office expenses (stationery, internet, etc.) used for director-related business activity
Professional fees (like legal, consultancy) related to business
Any other expenses that can be justified as related to earning commission
If treated as Income from Other Sources
No expenses are allowed except interest paid on borrowing related to earning this income (Section 57 of the Income Tax Act).
General expenses like telephone, travel, etc. are NOT deductible here.
Summary Table
Scenario Income Type Expenses Allowed
Director is Employee Salary No expenses allowed
Director not Employee Other Sources Only interest on loan related to income
Director not Employee with Business Business Income / Profession Expenses wholly and exclusively incurred
Practical Notes
Whether the income is business or other source depends on facts & circumstances; documentary proof of business activity and expenses is important.
Directors should keep proper records and bills for expenses claimed if treated as business income.
If commission is regular and the director has other professional/business activity, better to treat as business income to claim expenses.
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