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Rent to directors

27 April 2012

hello,

the owner of the office of the company is director of the company . can company pay rent to them? rent should be equal to market rate or it can be less then market rate? as the profit of the company is low and there is no rent paid so is there any problem as per company act or as per income tax act?

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2 Replies

CA Syed Raza Abbas Rizvi (PROPRIETOR ) (631 Points)
Replied 27 April 2012

Prepare a rent deed and get it approved from Board Of Directors through a board resolution. Keep in mind section 299 and 301. Entry in 301 register is necessary.

If it is Public company please check section 295 also and ofcouce the rent is subject to TDS

If the rent deed is not prepared, lessor and lesse relationship is not created then deedmed dividend concept will also attract

mansi jasvant thakkar (ca) (40 Points)
Replied 27 April 2012

it is pvt ltd co and director is also 50% share holder and there is no rent agreement and rent is also not paid then it is aginst company law or income tax act?