Dear All;
If a Director draws a fixed amount from a private limited company, will this amount be subjected to applicability of TDS.
If an agreement / appointment letter, confirming the employer-employee relationship is issued to Director, will we be able to show this amount as salary from the company?
Director insists that company should pay a fixed amount to him regularly on a monthly basis.
Kindly advice if any otherway possible.
Thanks in advance.
If an appointment letter confirming the employment of the director with the company, the director will be eligible for the monthly salary and the company is liable to deduct TDS on the salary. But, the director may or may not be holding shares in the private company. It all comes down to the appointment letter stating the terms and conditions of the employment of the director.
Yes, the Director is holding shares in the company.
Moreover, if there is no appointment / agreement letter confirminng the employer-employee relationship, isn't there any other way to show this amount.
If fixed salary is paid, that will be subject to deduction of TDS u/s 92B, taking into consideration the annual taxable income.
If fixed consultancy fees are paid, that will be subject to deduction of TDS u/s 194J.
Even commission paid will be taxed u/s 194H.
mihir is correct
But Take care the director should not draw any excess loan and the same should not attract provsions of secion 2(22) (e) deemd dividend
CAclubindia
