Another payment is under TDS net now . Finance Bill 2012 presented by Finance Minister while presenting Budget for FY 2012-13 has brought another bad news for directors of companies who , till now were enjoying TDS free remuneration under the arguments that the directors are not the employees of the company as such the said remuneration does not fall with in ambit of salary definition.
Now under Finance Bill 2012 , section 194J of the I T Act has been amended to include that tax is required to be deducted on the remuneration paid to a director,which is not in the nature of salary, at the rate of 10% of such remuneration. This amendment will take effect from 1st July, 2012.
The amendment is as under
In section 194J of the Income-tax Act, in sub-section (1), after clause (b), the following clause
shall be inserted with effect from the 1st day of July, 2012, namely:—
“(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; or”
So all companies must remember that TDS on directors remuneration must be made otherwise not only the expense may b disallowed , there may be penalty for non deduction of tax .