Income Tax on Payment to Director
Company directors are responsible for company’s day todays operation. As like company employees directors are working running company. There are various types of directors such as managing director , independent directors etc. As per terms of engagement company directors take salary , professional fees, consulting fees from company. For salary or professional fess paid by company , its companys responsibility to make TDS calculation , TDS payment , file TDS return & issue Form 16 / Form 16 A to directors of company. For below transaction income tax is applicable on payment to directors.
- Salary
- Sitting fees
- Remuneration
- Commission
- Brokerage
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Income Tax on Director Remuneration / Salary
Income tax is payable on salary / remuneration paid to directors. Director is en employee of company where he / she works for company for some monetary terms. Income Tax at rate of individual is applicable to salary payable to director. Income tax calculation on salary paid to director is online visit income tax site to calculate income tax (TDS) applicable on salary / remuneration to director. Below is income tax Rate for FY 2020-21 for salary to director.
| Income Tax Slab | Tax Rate |
| Up to Rs 2.5 lakh | NIL |
| Rs 2.5 lakh to Rs 5 lakh | 5% (Tax rebate of Rs 12,500 available under section 87A) |
| Rs 5 lakh to Rs 7.5 lakh | 10% |
| Rs 7.5 lakh to Rs 10 lakh | 15% |
| Rs 10 lakh to Rs 12.5 lakh | 20% |
| Rs 12.5 lakh to Rs 15 lakh | 25% |
| Rs 15 lakh and above | 30% |
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Income Tax on Directors Sitting Fees
Income tax on directors sitting fees, professional fees , consulting fees applicable at 10%. Director need to issue Invoice to company for its Professional or consulting fees. Where invoice amounts in years exceed Rs. 30000/- then income tax TDS at 10% is applicable. For example Mr. Yash is director at ABC Ltd and monthly he charge company Rs. 50000/- as professional services rendered. As invoice amount exceeds Rs. 30000/- , TDS at 10% shall be applicable company will pay Rs. 45000/- to director and Rs.5000/- as TDS to income tax department.
Section 194 J TDS Rate 10%
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TDS Payment Due Date for Director salary/Fees
Income tax deducted from directors salary / remuneration/ professional / consulting fees need to be paid to tax department. Payment of TDS is online process can be done with use of company net banking. Due date of tds For director salary/remuneration/sitting Fees is as below for FY 2020-21.
| TDS DEDUCTED IN MONTH | DUE DATE FOR NON-GOVERNMENT DEDUCTOR |
| April to February | On or before the 7th working day of next month |
| March | April 30th |
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Issue Income Tax Form 16 / Form 16 A to company directors
As end of financial year Private Limited company need to issue form 16 / Form 16 A to company directors. This forms are available after filing of income tax TDS return at government site. This form is calculation of salary / professional fees paid during the year to directors & Tds paid on same. This form required for income tax return filing of director of company.
