Opinion Of Eminent Legal Luminaries On Controversial Issues

Whether TDS Is Required To Be Deducted On Directors Remuneration?

QUERY: Pursuant to corporate governance norms of SEBI, listed companies are required to appoint Non-executive Independent Directors who may be industrialists or professionals like Advocates, CAs, etc. They are paid sitting fees for attending board meetings of the company. They are also paid a commission based on percentage of net profits of the company. Whether such payments are liable to TDS and if yes, under which section
ANSWER: – Non-executive Independent Directors are providing managerial services. Hence, Explanation 2 to section 9(1)(vii) would be applicable, which reads as under:

“Fee for technical services” means any consideration (including any lump sum consideration) for rendering any managerial, technical or consultancy services”.

– Therefore, tax is to be deducted on sitting fee and commission paid to non-executive director, under section 194J.

Posted in Income-tax
One comment on “Whether TDS Is Required To Be Deducted On Directors Remuneration?
  1. CA MANOJ GUPTA says:

    The Finance Act 2012 has amended section 194J so as to extend its scope to any payment by way of remuneration or fees or commission to director of a company except where such payment is covered by section 192. therefore it is now statutory provided to deduct tax under section 194J on payments to directors

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Credit: Several of the queries and answers are reproduced with permission from the AIFTP Journal. We thank AIFTP for generously allowing us to host their research material.
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