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How can a director/md withdraw money from pvt ltd curr acct

CVA Murthy (dir) (49 Points)

31 October 2015

I am a director of a 2 person (me and wife) pvt ltd. I withdraw a salary of 2 lacs/month from my company. I have some residual amount in company current account that I urgently need to withdraw (about 7 lacs). What are some legal ways to withdraw it. Since only me and my wife are the sole employees/directors of the pvt ltd, I have the ability to do any board resolution right now.

I asked a CA if I can give myself a 7 lac bonus, he said it is not advisable. I can bump up my salary, but that will still take a while to draw down the account. I need to withdraw the 7 lac amount in 1 month, maximum 2 months... (for a home purchase)

Thanks

CVA Murthy

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10 Replies

V D PATEL (CONSULTANT) (34 Points)
Replied 01 November 2015

There is no provision in company's Act. or in Income Tax law to withdraw any amount from the company for personal use.

KAVIRAJA ADDANGADI (PROPRIETOR) (16002 Points)
Replied 01 November 2015

YOU TAKE ADVANCE REMUNERATION , YOU CAN ADJUST THE SAME WITH YOUR FUTURE REMUNERATION . YOU TAKE LESS AMOUNT TO THAT EXTENT, MEANWHILE YOU CAN ALSO PASS RESOLUTION FOR INCREASE IN DIRECTORS REMUNERATION.

sagar jobalia (Audit) (22 Points)
Replied 01 November 2015

Salary is only way as otherwise it will attract provisions of The Companies Act 2013

GJRs Tax Consultancy Services (Tax consultant) (32 Points)
Replied 01 November 2015

There are some exception to section 185 of companies act 2013 relating to loan given to directors, in case if your company falls under that category u may take loan by filing appropriate resolutions with the ROC...so please refer those exceptions.

CA Parth J Mody (Practicing CA) (32 Points)
Replied 01 November 2015

Recently there has been an amendment in companies act exempting pvt companies from various clauses. Considering the closely held nature of many pvt companies one such exemption provided is with respect to section 185. Existing position Section 185 of the 2013 Act prohibited companies from advancing loans to directors and to persons in whom directors are interested or give any guarantee or provide any security in connection with any loan taken by him or such other person, a few exceptions aside. Revised position under the Notification The Notification currently provides that Section 185 shall not apply to a private company satisfying all of the following conditions: No body corporate shall have invested any money in the share capital of the company; and The borrowings of the company from banks, financial institutions or any body corporate shall not not exceed twice the amount of paid-up share capital or INR 500 million – whichever is lower; and There shall be no subsisting defaults in repayment of such borrowings at the time of making transaction.

1 Like

CA Parul Saxena (CA) (8425 Points)
Replied 02 November 2015

But it is seen that directors monetory growth goes up with the growth of the organisation......then how they withdraw money for personal use??????

SANTOSH CHASKAR (MBA) (35 Points)
Replied 04 November 2015

Can they sell their own car to the company... if they have and take money from account. Is it possible?. Because they are the director of the company ultimate they are going to use that same car.

Prajwal Manwatkar ( Accountant) (23 Points)
Replied 20 April 2019

what is the maximum withdrawal salary from private limited company

SANTOSH EGADE (2 Points)
Replied 18 April 2020

I am a director of a pvt ltd (Two directors me and my wife), I have retained profit of my company every year in reserve and surplus account, so we can withdraw whole reserve and surplus amount from company.

KAVIRAJA ADDANGADI (PROPRIETOR) (16002 Points)
Replied 25 April 2020

You can distribute dividends,Dividend distribution tax is the tax imposed by the Indian Government on Indian companies according to the dividend paid to a company's investors. At present, the dividend distribution tax is removed by government in financial annual statement 2020 Dividend income becomes taxable in receiver's hands