Payment of Sitting Fees to Directors – Whether tax is deductible at source?
INTRODUCTION One is often confronted with the question whether there should be deduction of tax at source against payment made by way of sitting fees to directors for attending meetings of the board and the committees constituted by it. The day before the Finance Bill, 2012 was presented in the parliament of India by Hon’ble Finance Minister Pranab Mukharji there was an ambiguity regarding the applicability of TDS provisions on the payment of sitting fees to the directors, that whether TDS is required to be deducted under section 192 or under section 194J of the Income Tax Act, 1961 or no TDS itself. But it seems that the above ambiguity has been resolved by the Finance Bill, 2012 with an introduction of clause (ba ) to sub section (1) of the Section 194J effective from 1 st July, 2012. SIGNIFICANCE OF THE ISSUE T he above issue is gaining significance in the current scenario when large corporations in india are paying substantial sum of money to their dire