Can a Director or Director's be employee of the company

Pvt ltd 33350 views 13 replies

Dear All,

 

My Managing Director recently called me and told that all people in the company, including him and other director to be taken on payroll of the company and he should be also given PF professional tax and other benefits exactly in same manner given to a regular employee.

We are a Pvt. Ltd. Company.

 

Now my question is can a Director or Directors be treated as an employee of the company?

 

Can we allow them to have Provident Fund and other benefit? Kindly provide reference of the Act or judgement

 

Regards

Govind

Replies (13)

Yes dear as per the company's Act a director can be appointed as whole time director/ Employee of the company, he will get a remunaration but cannot be considered as SAlary, and cant cliam deduction on salary in thename of the PF\ ESi, becouse as per Income tax Act there is no employer and employee relation

Dear Govind,


In terms of the Companies Act, a director is an agent, tustee and employee. A director is an employee if he holds a salaried employement and thus enjoyes all the benefits which are given to a regular employee.

A Managing Director is a director who holds such position. Thus, all the executive directors ( including managing director) are employees of the company too and at par with other employees.

regds
Deepak

The Directors can be the employee of company and received salary and other perks but the amount paid in any form to director is covered under the remuneration to director except the payment made to him for his services rendered by him in his professional capacity . Such payment are not allowed by the income tax

Yes, if a director is MD/WTD, he is also an employee of the co. 

Agree with above replies...

dear experts,

please clarify. is it possible a person can be a director of the company and employee of other company?

regards,

hari

I guess ...

 

it is very much possible provided he is not a Whole Time Director in that company. I had seen one case where individual was a director in three companies (not WTD) and plus employed Financial Consultant in other different company.

Dear Friend

 

If a person is appointed as executive director then he/she will be treated as employee, whether he/she take remuneration from the company or not.

 

In case of MD/WTD, they will be treated ad executive director and treated as employee of the company.

 

Regards

Under which section can I find a statement that explictlyt (or even otherwise) states that a director can also be an employee of the company. I need to submit in the court a proof that it is not illegal for a director to be an employee of a company (private limited).

I just wanted to know one more thing, if the director is not taking any remuneration for a particular period of time and then starts taking remuneration, can he claim the remuneration for the earlier period too?

A MD/WTD is in any case a director in whole time employement of the company capable of drawing salary from the company. MD/WTD are executive directors, while other directors who only attend board meetings and get paid sitting fees for the same, are non executive directors and are not in employment of the company. This distinction needs to be borne in mind.

Dear all ,

Please clarify with the applicability of reverse charge mechanism where service tax needs to be paid to govt on the remuneration / fees paid to director . In such case whether to deduct TDS on such payments if so to show under 26Q  or  24Q of return filing .

Awaiting a clear answer . 

 

 

IS IT MANDATORY TO DEDUCT PF IF DIRECTORS ARE BEING PAID SALARY (TDS U/S 192A). CAN THEY BE EXEMPTED FROM PF. AND IS THERE ANY REQUIREMENT TO MENTION IT IN PF RETURN UNDER EXCLUDED EMPLOYEES

 


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