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TDS on Sitting Fees

ashish ashtekar (service) (26 Points)

09 September 2009

We pay sitting fees of Rs.50000/- annually to Resident Director of our company.

Are we required to deduct tax on this siitting fees as per Income Tax Act?

Under which section?

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5 Replies

CA Mohit Agarwal (Chartered Accountant) (1025 Points)
Replied 09 September 2009

Hi ashish

T.D.S will be deducted @ 10% under section 194J.

CA CS CIMA Prakash Somani (Landmark Group) (23512 Points)
Replied 09 September 2009

Director sittig fees is not liable to TDS.

aurangzaib khan (financial consultant) (95 Points)
Replied 09 September 2009

Director sitting fees nither salary income nor frofessional income, hence it is not liable to tds

(Guest)

A director is also a manager under the provisions of the Companies Act, 1956. He is, therefore, technical personnel. Any payment made to such director (be it sitting fee or any other sum) shall be required to be taken into consideration for the purposes of deduction of tax at source under section 194J.

mbshah_31 (12 Points)
Replied 10 September 2009

Mr. Ashish,

To your Query I would like to enlighten you as below:

- Sec. 309 (2) of the Companies Act, 1956 very well differentiate Sitting Fees from Managerial Remuneration u/s. 309(1) of the said act.

- Managerial Remuneration paid by the Company to Executive directors are in nature of Salary, as there exists Employer-Employee relationship.

- Now coming to sitting Fees paid to director is not covered under the nature of Salary 192(1). Work Contract 194C nor it can be arbitarily made fall to 194J Professional Services.

- Explanation to Sec. 194J - has defined Professional Services which are mentioned under Sec. 44AA of the Income Tax Act, 1961 and further it cannot be made fall under Technical Services as it is says "Consideration for rendering of any managerial, technical or consultancy services."

-However Sitting Fees are paid for attending the meetings not other way round.

SO NO TDS REQUIRED TO BE DEDUCTED

Find it appropriately.