Tax Planning for Private Companies

Hii Professionals,

Please help me with the tax planning of private companies.

A private company has 2 directors and these 2 directors are also the shareholders of the company.

We need to pay both these directors a sum of 20 lacs annually to each of them.
Please suggest some way so that tax liability is minimum to both of them because if we pay whole 20 lacs as a salary then they would have to pay a hefty amount of tax.

thanks in advance
Replies (3)
Quick Summary
This discussion explores tax planning strategies for private companies where directors are also shareholders. The core issue is minimising tax liability when paying directors a substantial annual sum. While paying the full amount as salary incurs significant personal income tax, the advice suggests alternative methods. These include director sitting fees for board meetings, interest on loans provided to the company, and rent for business use of a director's car or premises.

If you wouldn't pay them,you would end up paying 25.17% as companies income tax and if you pay them, directors would pay 21.45% as personal income tax. So it is a very crystal clear proposition
I understood your point but what are the ways through which we can pay to directors other than salary
Director Sitting Fees for attending Board meetings , Imterest on loan take by company from director , Rent for director's car used for business purpose, Rent for director's premise uses for business purpose.

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