Advance against salary

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Tax Practioner
240 Points Posted on 22 May 2020

can a director of a private limited company, withdraw amount from company as advance against salary for the year?

Any compliance for this in ROC and income tax?

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On 22 May 2020 at 10:50 Report
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This discussion explores whether a director of a private limited company can take an advance against their annual salary. It highlights that Section 185 of the Companies Act likely prohibits this as it's considered a loan. An alternative suggested is to treat it as excess remuneration, which must be repaid to the company within two years, avoiding direct loan implications.

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Finance/Compliance Consultant
69650 Points Posted on 22 May 2020

I think it is not allowed under section 185. Please see the below 

https://www.mca.gov.in/SearchableActs/Section185.htm

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On 22 May 2020 at 20:09
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133 Points Posted on 24 May 2020
A Director Cannot take advance salary since it's a form of loan under section 185
however you can show it as excess remuneration to director that shall be refundable to company within 2 years
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On 24 May 2020 at 00:59

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