Professional fees to directors of a private company

amit pobari (Consultant) (22 Points)

03 August 2018  

We have a company client which is a privately held company. Its directors are its share holders. We are propossing to make the payment of Professional fees to directors instead of salary. As far as I know the director remuneration can either be income from salary or income from other sources in his/her individual return. And if we are deducting tds u/s 194J for sitting fees, comission etc. It should be taken to income from business and profession. Can you advise if we can pay professional fees and deduct tds u/s 194j for all the directors? and any supporting provision or case law which we can refer for any future despute with income tax or as back for companies act compliance. Over all intension is for tax planning by giving professional fees to directors and claim thier individual business related expenses in their personal return/books instead of claiming their professinal exp in company's books of accounts i.e. their travel, accomodation, professional fees and journal subscriptttion etc. Also want to confirm do we need to keep one director on salary in the company or all the directors can be on professional retainership.