Tds on directors remuneration is to be deducted as per section 192 or 194J?
Can director remuneration be called as Salary?
What does section 194J (1)(ba) of Income tax act,1961 speaks about?
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Tds on directors remuneration
Replies (12)
Deducted As per 194J, even director sitting fees below 5000.
Further, there is no threshold limit of 30K for this.
Any Amount paid other then director's Salary or whatever name U/s 194J (1)(ba) Applicable 10%
Any payment made to director, by whatever name called, shall be covered under section 194J for TDS. There is no threshold limit for the same.
@ what rate tds to be deducted for any amount paid to director?
Is it 10%.
Please note that in case director is a managing director then there will be employer employee relationship and any remuneration paid in the form of salary will be deducted under section 192.
There are two types of Directors:
1. Executive (exists employer-employee relation)
2. Non Executive (no such relation)
In 1st case payments to Executive Directors are treated as salary and TDS u/s 192 is to be deducted.
In the 2nd case whatever payments made to Non Executive Directors will be treated as professional charges and TDS is deducted u/s 194J and no minimum limit of Rs. 30,000 is applicable to these payments.
Very clear and useful info sir..but may I know where it is mentioned that 30k limit doesn't apply here?
2 types have you deduct tds
1) director as employee u/s 192
2) director as director (I.e) professional fees for sitting fees, attend company board meetings, general meetings. U/s 192j no minimum limit.
it is mention itself in u/s 194J. there are 5 clauses. it is clearly mention there that limit of 30000 is applied in case of all 4 clauses. And 5th clause is about director remuneration. so it is.
Exactly as said by Arif Ali Section 194J (1) (ba) says we have to deduct TDS @ 10% on payment to directors for whom section 192 is not applicable (nothing but for non executive directors as I said earlier), what ever the name of payment is. And Proviso to sec 194 J (1) says such TDS of 10% to be made only when the amount paid exceeds Rs. 30,000 in case clauses a, b, c, and d. So as clause (ba) is not mentioned in proviso the limit of Rs. 30,000 is not applicable to payments made to directors. Hope I'm clear.
Please refer to item "B" of 'proviso to Section 194J(1)'
Also I've attached the extract of section 194J with relevant areas highlighted.
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