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Section 194j(1)(ba)

Deepak Tapse (Accounts Manager - Taxation) (1771 Points)

02 April 2012

As per New section 194(J)(1)(ba), payment made to directors remuneration, tds to be deducted under Professional Fees. , Till date we have treated as salary and deducted Providend Fund and paid to the goverment. Now If it treated reruneration as Business Income as per new section then Providend Fund to be deducted or not.

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Sonam Bidasaria (CA) (770 Points)
Replied 03 April 2012

Provident Fund is covered under Employees Provident Fund Act and TDS on salary is covered under Income Tax Act, 1961. Deduction of Provident Funds is merely an APPLICATION OF INCOME AT SOURCE.

It will have no impact on TDS. i.e. If a director is paid Rs. 1,00,000 and Rs. 12000 is deducted and deposited to the credit of Central Govt, TDS will have to be dedcued on 1,00,000.

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Deepthi Srivastava (Chartered Accountant) (81 Points)
Replied 19 December 2012

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 ;

This amendment will take effect from 1st July 2012.

Mr. Deepak, if you are giving remuneration to the director in the form of salary, it will still attract 192. Only other remuneration like commision, sitting fees and fees for other technical or professional service you have to deduct TDS u/s 194J(1)(ba) @ 10%. So you can still give the benefit of PPF deduction u/s 80C and calculate the amount of TDS if the remuneration is in the form of salary.

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