LIVE GST Certification Course by CA Arun Chhajer begins 21st April. Register Now!!

Which TDS Section applicable

kushal jain (14 Points)

21 June 2019

Which section is applicable in case of "Salary paid to the director of a company" ?
Section 192 or 194J ‽

Reply
Follow
Share

6 Replies

Giridhar S Karandikar (Team Lead) (7543 Points)
Replied 21 June 2019

Regular monthly payment made for service rendered to co in normal course will be 192 and any other payment as remuneration for providing technical services will be 194J

kushal jain (14 Points)
Replied 21 June 2019

But how can I define Employer - Employee Relationship between Director and Company ?

Suresh Thiyagarajan (Student) (3986 Points)
Replied 21 June 2019

1. Unlike payment of salaries to other employees, payment of salary or remuneration to a director still breeds confusion among the deductors under which section TDS should be deducted..?
2. There must be an employer-employee relationship if the payment is to be covered under sec 192. In some cases, directors are not considered employees. That's the reason for calling the payment to directors as remuneration instead of calling it a salary.
3. So the provision of TDS will depend on the situation to situation basis. If he is paid salary under the contract of employment TDS u/s 192 should be deducted. If he is been paid remuneration, commission or any other sum which is not covered under salary, then TDS u/s 194J should be deducted. (10% without any threshold limit)
4. In your case since you have clearly mentioned as "Salary" sec 192 should apply.

1 Like

CA Raj Doshi (Practising CA) (8723 Points)
Replied 21 June 2019

Just a Practical answer - TDS return as well as the salary schedule in ITR form asks for whether Specified Employee. Directors are covered here. Accordingly Directors Remuneration shall be taxable as salary in hands of director and tds u/s 192 shall be deducted. Put it other way, directors are not employees of the company so income tax act have specifically tagged them as employees. Thus employer employee relation exists.

kushal jain (14 Points)
Replied 21 June 2019

Sir, would you send me extract of salary schedule of ITR Form ?

Dipesh Jha (PRACTICE ) (673 Points)
Replied 23 June 2019

Since u said salary to Director then it will cover under Section 192B....howver if its not salary like if Director Sitting Fees then in this case 194 will be applicable....so its wholly depends upon ur Natur of payments