# TDS on Director's Remuneration under Section 194J

## Core Rule

Section 194J requires deduction of tax at source @10% from any sum paid to a resident director by way of:

Remuneration
Fees
Commission (by whatever name called)

This applies only when such payment is not in the nature of salary on which tax is deductible under section 192.

## Key Distinguishing Feature - No Threshold for Directors

Payee	Threshold under 194J
General professional/technical service provider	₹ 50,000
Director (sitting fees, commission, etc.)	NIL - TDS from Re. 1

> Important: The threshold limit of ₹50,000 (which applies to other payments under 194J) is NOT applicable when the payment is made to a director.

## Computation Logic

TDS = Sum paid to director × 10%

## Why Directors Are Treated Differently

Directors receive sitting fees, commission on profits, etc., which are not salary (no employer-employee relationship for non-executive directors). To prevent leakage, the threshold is removed so even small amounts attract TDS.

⚠️ Common exam mistakes

Applying the ₹50,000 threshold to director's payments — the threshold does NOT apply to directors.
Treating non-executive director's sitting fees as salary under section 192 — they are covered by section 194J.
Applying 2% rate (applicable to certain other 194J payments like technical services) instead of 10% for director fees.

Bare-Act text 194J · Income-tax Act, 1961 · click to expand

Section 194J provides for deduction of tax at source @10% from any sum paid by way of any remuneration or fees or commission, by whatever name called, to a resident director, which is not in the nature of salary on which tax is deductible under section 192. The threshold limit of ₹50,000 up to which the provisions of tax deduction at source are not attracted in respect of every other payment covered under section 194J is, however, not applicable in respect of sum paid to a director.

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Section 194J - TDS on Director's Remuneration

Worked example

⚠️ Common exam mistakes