How can a Pvt Ltd company owner pay themself a salary and then reinvest that back into company

Others 2648 views 4 replies

Pradeep V

User

21 Points Posted on 22 April 2024

I have a newly incorporated Pvt Ltd company, where I am the majority share holder, I want to show that I am paying myself a salary through the company as a director or CEO, but also want to inject that money back into the company to aid it's growth, as there is no profit right now.

If I'm paying myself a total of 51,000 per month, Is it benificial to show the basic salary as a lower amount and the remaining as incentives, could you confirm what taxes would be applicable, on either the company or me, and if there is any way to get any relief on those taxes.

Also what would be the correct method to reinvest the salary I receive back into the company by also keeping any taxation applicable to a minimum.

Any of your expert help would be highly appreciated, thank you.

Replies (4)

Quick Summary

A Pvt Ltd company owner can pay themselves a director salary, taxable under salary income, while the company treats it as an expense. The received amount can be reinvested into the company through share capital or a loan/current account to support business growth.

RAJA P M

"Do the Right Thing...!!!"

128152 Points Posted on 22 April 2024

Well...

1. Yes, You can take salary as Director Salary. No issues for this.
In Your side of Taxation view it's calculated as "INCOME FROM SALARY" and Income Tax is based in Slab Rate.

In company's book it's a Expenditure like "DIRECTOR SALARY"

2. Yes, You can (reinvest) give amount as loan to company through Current Account** and You can withdraw the amount at anytime. No issues in this transaction.

Harish varun

228 Points Posted on 02 August 2024

As a Private Limited Company owner, you can pay yourself a salary by officially designating yourself as an employee or director and issuing a salary through the company’s payroll. Once you receive the salary, you can reinvest it back into the company by purchasing additional shares or providing a loan. Ensure that all transactions comply with the guidelines set during the private limited company registration and adhere to relevant legal and tax regulations.

Renuka M

4 Points Posted on 10 August 2024

https://www.kanakkupillai.com/private-limited-company-registration

Tax Garden

Tax Consultant

790 Points Posted on 01 June 2026

Director salary in a private limited company works through a structured process:

Step 1: Authorise the salary
Pass a Board Resolution authorizing the director to draw a salary. The Articles of Association typically allow this but the resolution creates the formal record. No government approval needed for executive directors (only for non-executive directors above prescribed limits under Section 197).

Step 2: TDS on salary
The company must deduct TDS under Section 192 on the director salary, computed on the estimated annual salary after the director submits Form 12BB (investment declaration). Deposit TDS by the 7th of the following month and file quarterly TDS returns in Form 24Q.

Step 3: Reinvesting into the company
Two clean ways to put money back:
- Unsecured loan from director: Simple. Pass a board resolution, maintain a written loan agreement, ensure the director receives the money personally first. The company shows it as borrowings in the balance sheet. No RBI approval needed if the director is also a shareholder.
- Increase in paid-up share capital: Issue new shares to yourself at face value or a premium via board and shareholder resolution, and file PAS-3 with MCA within 15 days.

One thing to avoid: routing money back via personal credit card payments on behalf of the company without documentation. That creates reconstruction risk during scrutiny.

This [ROC annual compliance guide](https://taxgarden.in/blog/roc-annual-compliance-private-limited-company-india) explains the ongoing filing obligations that come with running a Pvt Ltd, including board meeting requirements and the forms that relate to share allotment and director transactions.