Remuneration of directors in a pvt.ltd company

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Surinder Mittal (Querist)
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01 April 2013 Our client's company has four non-executive directors since the time of formation of the company . The work of the company and its directors has increased immensely and thus the board of directors have decided to pay monthly remuneration to all of the four directors . Articles of Associations of the company is silent about the remuneration part .
TDS on this remuneration is being deducted on monthly basis .
Query 1 : Whether it is necessary to alter the Articles of Association to include the remuneration clause whereas the board of directors have already passed the ordinary resolution in the board meeting before giving the remuneration ?
Query 2 : Whether it is compulsary to ammend Form No.32 by making them non-executive to executive directors and what is the procedure to ammend the Form no.32 ?
Query 3 : Whether there is any problem if after making the payment/provision of salary , the profit of the company will be in negative ?

CA. PIYUSH GOEL

CA. PIYUSH GOEL (Expert)
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01 April 2013 dear surinder mittal..

i cannot answer your first and second querry exactly because i dint hae perfect knowledge aboubt ROC matters.. i leave those querries for the other experts..

as far as income tax matters are concerned.. you must convert them into executive directors because as per sec. 194J TDS on the remuneration paid to directors, (other than those whose remuneration is covered other sec, 192) is deductible under that section.

and in my opinion executive directors remuneration is still governed by the provisions of sec. 192..

more over since director is a specified person as per sec. 40A(2)b for a company therefore excess remuneration paid may be dis allowed by the ITO during the assessment proceedings.