Share on facebook
Share on twitter
Share on linkedin
Share on whatsapp

TDS on Salary to Directors under section 194J(1)(ba)

Table of Contents

As per Section 194J(1)(ba), any remuneration or fees or commission by whatever name called other than those on which tax is deductible under Section 192, to a director of a company shall be liable for TDS under Section 194J.

Analysis of Section 194J(1)(ba)

  • This clause will apply only in respect of payment by a company to a director of the company and not in any other cases.
  • This clause will not apply if the tax is deductible under the Section 192 i.e. Income taxable under the head salaries. If there is an employer-employee relationship then such payment is covered under Section 192. Generally, executive directors are paid salary and they are not entitled to any other fee such as sitting fees etc.
  • If a director is a non-resident director then the TDS is required to be deducted under Section 192 if it is chargeable under the head salaries or under Section 195.

Nature of Payments covered u/s 194J

  • Sitting Fee
  • Fees for attending meetings
  • Remuneration
  • Commission
  • Brokerage

Rate of TDS

TDS is required to be deducted @ 10% on the gross amount.

Threshold Limit

There is no threshold limit so tax is required to be deducted even if the total payment during the year is Rs 10.

Examples

  • ABC Ltd paid Rs. 20,000 per month to Mr. B who is an executive director of the company along with Rs. 8,000 per year for the sitting fees

No TDS is required to be deducted on monthly salary payment as Mr. B is an executive director of the company. However, TDS of Rs 800 shall be deducted under Section 194J for the sitting fees paid to the director.

  • ABC Ltd paid Rs. 20,000 per month to Mr. B who is a non-resident executive director of the company along with Rs. 8,000 per year for the sitting fees

No TDS is required to be deducted on monthly salary payment as Mr. B is an executive director of the company. However, TDS @ 30% i.e. Rs 2400 shall be deducted under Section 195 for the sitting fees paid to the non-resident director.

  • ABC Ltd paid Rs. 20,000 per month to Mr. B who is a non-executive director of the company along with Rs. 8,000 per year for the sitting fees

TDS of Rs. 24,800 (Rs 2,48,000 *10%) is required to be deducted as both of the receipts shall be considered under section 194J.

Prateek Agarwal

Prateek Agarwal is a Practicing Chartered Accountant from Jaipur and been in practice for more than 7 years. He writes mainly about GST and Finance.

Read More Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

GST & Income Tax Magazine

Our fortnightly magazine covers all important updates and also articles by experts.

Learn More >>

Practice Management Software for CAs/Tax Professionals

Manage your practice efficiently. Save your team efforts and time. 

Learn More >>

GST Return Status Bulk Checker

Check GST return status of your client’s or suppliers using GSTIN. Check status of any number of GSTIN with single click.

Learn More >>

Practice Management Software For CA/Tax Professionals

Leave all hassles of Excel/Google Sheets




 
Know about Awesome Features!
close-link
SUBMIT YOUR QUERY

Upgrade to paid query in Rs. 499 and get answer within 24 hours

NOTE - You may get answer to free queries within 30 working days
KNOW MORE!
close-link