So, he is not an employee and hence there need not be any bifurcation of emoluments. You may pay him consolidated remuneration (@ Rs.40k). You further note the following in this regard.
A directorship is an office, not necessarily an employment. If, however, the company enters into a service contract with the director, the terms of which make the Director, an employee under the usual common law, then the Director becomes an "employee". Many companies' Directors are in this position.
Since you said excluding EPF/ESI, he's anyway outside the limits. But it's only optional. As regards to PF:
Directors on salary should also be counted for computation of employees for coverage. Deduction towards PF can be made if he is not opted for excluded employee with in the meaning under the Act. Directors getting remuneration shall be excluded.
'Salary' consists of yearly gross wages. Employer can be paid on hourly rate or a fixed amount on regular basis, monthly also. Remuneration can include salary, commission, compensation. Hence salary & remuneration is one and the same thing, remuneration being a wider term which includes salary also.
Since Rs.40k earmarked seems to be within the limits of remuneration provided under the Companies Act there's no difficulties.
The Act provides ceiling limits for remuneration in case of Public Companies. Here, total remuneration shall not exceed 11% of the net profit of the company. Total returns and remuneration paid to Managing Director, Whole-time Director and Manager shall not exceed the limits as described under the act.
Maximum remuneration for a Director:
Capital (Rupees) Highest limit for Remuneration to a Director
Less than 5 crores 30 lakhs
5 crore or more but less than 100 crore 42 lakhs
100 crore or more but less than 250 crore 60 lakhs
250 crore and above 60 lakhs along with 9.99% of the capital
in excess of Rs. 250 crore
These are subject to Adv.Tax/TDS as the case may be.
Also pl.go thru' the attached writeup on the subject which gives you overall knowledge for better admin.
From India, Bangalore
1073A directorship is an office, not necessarily an employment. If, however, the company enters into a service contract with the director, the terms of which make the Director, an employee under the usual common law, then the Director becomes an "employee". Many companies' Directors are in this position.
Since you said excluding EPF/ESI, he's anyway outside the limits. But it's only optional. As regards to PF:
Directors on salary should also be counted for computation of employees for coverage. Deduction towards PF can be made if he is not opted for excluded employee with in the meaning under the Act. Directors getting remuneration shall be excluded.
'Salary' consists of yearly gross wages. Employer can be paid on hourly rate or a fixed amount on regular basis, monthly also. Remuneration can include salary, commission, compensation. Hence salary & remuneration is one and the same thing, remuneration being a wider term which includes salary also.
Since Rs.40k earmarked seems to be within the limits of remuneration provided under the Companies Act there's no difficulties.
The Act provides ceiling limits for remuneration in case of Public Companies. Here, total remuneration shall not exceed 11% of the net profit of the company. Total returns and remuneration paid to Managing Director, Whole-time Director and Manager shall not exceed the limits as described under the act.
Maximum remuneration for a Director:
Capital (Rupees) Highest limit for Remuneration to a Director
Less than 5 crores 30 lakhs
5 crore or more but less than 100 crore 42 lakhs
100 crore or more but less than 250 crore 60 lakhs
250 crore and above 60 lakhs along with 9.99% of the capital
in excess of Rs. 250 crore
These are subject to Adv.Tax/TDS as the case may be.
Also pl.go thru' the attached writeup on the subject which gives you overall knowledge for better admin.
From India, Bangalore
Dear Sir,
Our Managing Director is decided to take salary from jan2021. Would like to know whether PF to be deducted, as he is already drawing salary from other company. Our is private limited company. Our MD is already a member and is getting paid from that company.
please advise.
regards
uma
From India, Hyderabad
Our Managing Director is decided to take salary from jan2021. Would like to know whether PF to be deducted, as he is already drawing salary from other company. Our is private limited company. Our MD is already a member and is getting paid from that company.
please advise.
regards
uma
From India, Hyderabad
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PF & ESI.zip
Presentation PF&ESI.ppt
Exp.and esi pf mis format.xls