Sitting fees to directors

As per Sec 198(1), the total managerial remuneration as a percentage of profit compputed in accordance woth Sec 349 shall not exceed 11% of net profit.

And As per Sec 198(2), the percentage as aforeaid shall be exclusive of any fees payable to directors under Sec 309(2).

Sec 309(2) provides that a director may receive remuneration by way of a fee for each meeting of the Board or a committee thereof, attended by him.

While computing net profit/loss under section 349 of the Companies Act, 1956 for the purpose of determing Directors remuneration , sitting fees is not deducted from profit /loss. 

AGREED WITH SONAM

The gist of the relevant provisions quoted by Sonam is that as the sitting fees is excluded from the calculation of ceiling of Managerial remuneration, therefore, the same may not be treated as Director Remuneration under these provisions. Hence, it is not deductible in computing the profits u/s 349.

As rightly summed up by Vidhya.

Please also consider that any remuneration or fees or commission payable to a director of a company, other than those on which tax is deductible under Section 192, shall be liable for TDS under the provisions of Section 194J

This amendment will take effect from 1 July 2012.