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Mahesh SV (Accounts Manager) (85 Points)

16 August 2016

What is TDS applicable for payment of monthly remuneration to MD of Pvt Ltd company

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Devendra Singh (Chartered Accountant) (487 Points)
Replied 16 August 2016

TDS on remuneration paid to managing directors is deductible u/s 192 at the normal rates applicable to individuals.

Thirumalai Kumar (Practicing Cost Accountant) (213 Points)
Replied 17 August 2016

TDS ON REMUNERATION PAID TO DIRECTORS u/s 194J(1)(ba) of INCOME TAX ACT,1961

The newly inserted clause (1)(ba) of 194J reads as under:

Any remuneration or fees or commission by whatever name called, other than those on which tax is deductible under section 192, to a director of a company shall liable to be deducted @ 10%.

Till the introduction of the above new clause, there is an ambiguity whether the tax is to be deducted at source on sitting fees and commission paid to directors or not. Now with the insertion of new clause (1)(ba) in Section 194 J, it clear that TDS has to be made from any remuneration or fees or commission paid to directors.

Readers may note that the newly inserted clause covers any remuneration paid whether by way of fees or commission or by any other name and such payments shall be subjected to TDS @ 10%.

Readers may also note that prior to the insertion of proposed amendment, Section 194(J) refers to TDS on amounts paid for professional and technical services. By amendment TDS even sitting fees and commission paid have to be covered. By implication sitting fess and commission are bracketed under professional and technical Services.

Some companies have been following the practice of deducting TDS. But with the introduction of clause 1(ba) in Section 194J, it becomes mandatory for all companies to deduct TDS @ 10% on sitting fees, commission paid to directors other than whole time directors and Managing directors. This amendment is welcome as TDS can now be effected on sitting fees, commission and any other payments made to Directors.

CA Harshal Totla (Chartered Accountant) (2229 Points)
Replied 17 August 2016

Remuneration paid to MD is liable to tds u/s 192 as per the applicable rates for individuals as per finance act. MDs are in employment of co.just like other employees whose appointment is different from independent directors who are liable to tds u/s 194J.

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mohammad (article assistant) (123 Points)
Replied 17 August 2016

director remuneration whether public or private sec 194J of i.t act 1961 governs the TDS deduction @ 10% specially there is no any threshold limit for the directors remuneration in this provision..

Yajuvendra Rawat (Internal Auditor) (296 Points)
Replied 17 August 2016

First and foremost their is no threshold limit in deduction of TDS towards Directors in case of fees or commission as rightly said by Mr. Mohammed. Secondly if a company makes payment or you can remuneration to a director considering him as an employee, TDS U/s 192B will be applicable, however if he receives fees or commission then in such a case TDS U/S 194J will be applicable and that too without any threhold limit.

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