4.
Pl refer Press Note dated 13-07-2012 issued by the Ministry of Finance. As per the said Note the following scnerios
1) Payments to directors...
Not excluded and thus taxable:
1) Applicable to all kinds of directors except of government regulatory bodies
2) Any monetary or no-monetary consideration
a) Director’s fee
b) Commission/bonus
c) Company car/ travel reimbursements
Now Refer: Services by Employee to employer:
1) Casual employees covered; contractual outside
- Services provided outside the terms of employment will be taxable e.g.
―Private coaching beyond school hours when under no obligation under the contract taxable
―Bonus, overtime and termination amount not taxable
―Non-compete taxabl
See the difference: In case of contractual employee, commission ^ bonus are not taxable whereas in the case of Directors the same is taxable.
It is therefore advisable, wherever possible, a contract of employment may be entered into with the Directors with detailed specification as to
what payments will be made in terms of the contract. The directors should also take care to spend expenses in the name of the company itself
like getting the Pertro Bill issued in the name of the company itself, bill from the hotel stay etc. Difficult will arise in the case of travelling where tickets
are not issued in the name of the company but only in personal name. In such cases, the payment by cheque should be made directly by the company
and not by the Director and thereafter get reimbursement. Many more issues are there which should be tackled under above guidance.
By CA Lalit Munoyat