TDS on Remuneration Paid to Directors, TDS on Director’s Remuneration

TDS on Remuneration Paid to Directors, TDS on Director’s Compensation. Directors are paid factor to consider in the type of salary, or in any other nature for e.g. sitting charges (payable to directors for attending board conferences), etc. Such payment made to the director undergoes TDS deduction. This article will discuss how the director’s compensation will be treated with respect to TDS liability. Now Check more information for “TDS on Reimbursement Paid to Directors, TDS on Director’s Compensation” from below …

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Material in this Article.

TDS on Remuneration Paid to Directors

Where does TDS come into the image?

Directors are paid income and other remuneration for e.g. sitting fees, commission, and so on. TDS applicability will depend on the nature of payment made to the director.

Where the reimbursement is paid as wage

In this circumstance, we can say that there is an employee- employer relationship in between the company and the director. This would hence come under the province of area 192.

Area 192 is for TDS for the income which is accountable to be taxed under the head of the wage. Here, the company is accountable to deduct TDS on reimbursement depending upon the tax saving figures, interest on the loan, and so on. This is like TDS reduction for all the workers made by the company.

Where the remuneration is paid besides salary.

Director gets certain other factor to consider in the type of sitting charges or commission and so on. This payment is not covered under area 192 province.

A new provision placed under section 194 J, state that all such payment paid other than salary must be liable for TDS deduction under area 194 J.

Henceforward, the business must deduct TDS under area 194 J, any place such compensation is not covered under the purview of area 192.

It becomes apparent now that for determining the liability under section 192 and section 194 J depends upon whether there exists employee-employer relationship.

  • If the director is paid wage, which indicates there exists employer-employee relationship, then the company needs to deduct TDS under area192 (generally, executive directors receive income)
  • If the business pays remuneration to directors, which is aside from salary, then it would be presumed that there exists no employer-employee relationship. This would require that the business needs to subtract TDS under area 194 J. (usually appropriate to handling director/ entire time director, who get sitting fees or commission in addition to income )

Extra indicate be noted

  • There is no limit (of Rs. 30000) for director’s compensation which is covered under the purview of section 194 J. This indicates that any and every amount paid as payment aside from the salary would be responsible under section 194 J TDS reduction.
  • Wherever section 192 is not practiced, section 194 J enters the photo with regard to director’s compensation.
  • TDS under area 192 is typically effected with regard to the salary paid to manage director, whole-time director or executive director.
  • TDS under area 194 J will apply @10%.
  • TDS under section 194 J applies usually to the non-executive director (independent director). This is because there is no employer-employee relationship in between the company and the Non-executive director.
  • Directorship is on the list of professions which would result in earnings by way of sitting fees and so on, which would be taxable under the head “earnings from business or occupation.” Such income is hence accountable for TDS under section 194 J.

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