PROFESSIONA FEES TO DIRECTOR

This query is : Resolved

RAKESH B SHAH (Querist)
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05 January 2010 WE CAN PAY AS PROFESSIONAL FEES TO DIRECTOR AND AGAINST THE SAME FEES CAN HE BOOK EXPENSES

IT IS ALLOWABLE UNDER COMPANIES ACT ALSO

Zeeshan

Zeeshan (Expert)
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05 January 2010 as per income tax:
there is no problem as such if payment made to director on account of professional service provided he is bonafidely providing professional services to company.

Otherwise the payment will be covered u/s 40 a 2b i.e. payment to specified persons and excessive payment can be disallowed by the AO.

Further a professional person can claim deduction of any expenditure incurred in relation with provision of service means expenses should be related with profession e.g.salary of assistant, telephoen, car, electricity exp. of office, dep. on assets used directly or indirectly for service etc.

However as per companies act any payment made to director will be treated as director's remuneration so you have to take care of provisions related to director's remuneration as per companies act.