Remuneration of directors

Hi...

The definition of the term'Remuneration' has been provided as Explanation under section 198 of the Companies Act, 1956. The definition is however an inclusive one and not an exhaustive definition.

God Bless

Udit Sharma 

Dear ashish, u can see what all includes in word "Remuneration" as per Section 198 for the purpose of Managerial remuneration. To memorise it easy, its moreover like the definition of perquisites in INcome tax Act. It includes any expenses borne by the company which would be otherwise borne by the the Director. Reproducing the explanation for your reference.

Explanation.-For the purposes of this section and sections 309, 310, 311, ⁶[* * *] 381 and 387, "remuneration" shall include,-

(a) any expenditure incurred by the company in providing any rent free accommodation, or any other benefit or amenity in respect of accommodation free of charge, to any of the persons specified in sub-section (1);

(b) any expenditure incurred by the company in providing any other benefit or amenity free of charge or at a concessional rate to any of the persons aforesaid;

(c) any expenditure incurred by the company in respect of any obligation or service, which, but for such expenditure by the company, would have been incurred by any of the persons aforesaid; and

(d) any expenditure incurred by the company to effect any insurance on the life of, or to provide any pension, annuity or gratuity for, any of the persons aforesaid or his spouse or child.]

Thanks

Nithin

Thanks for your reply. BUT please let me know what particulars are exepmted from the ceiling limit under schedule XIII.

because there are things forming a part of  remuneration but exempted from calculation of ceiling limit under schedule XIII. want to know whether any contribution of PF, payment of gratuity etc is totally exempted or to the extent of Income Tax exeption. Though sch. XIII mentions to the extent it is allowed under IT Act. The sch XII speaks of monthly or yearly payments,  but these , being in the nature of retirement/ termination of service , will the payment like PF, payment of gratuity, annuity etc will also be included in calculation of ceiling limit.

To be concise and in simple words :

Remuneration of Directors includes any payment to him or on behalf of the director which is required to  be paid by him or for the benefit of his/her family member.