@Surbhi_Pal @Diksha_Bang @TeamQuicko
hi
A private limited (Pvt. Ltd.) unlisted company, with annual revenue of less than ₹1 crore, has an employee who also serves as a director holding 1% shareholding.
The company agrees to pay 20% of the director’s annual salary for the FY2025–26 as advance salary in March 2025, upon the director’s request.
The director will pay the applicable TDS on this advance salary in FY 2025–26. The remaining 80% of the annual salary will be disbursed monthly during FY 2025–26 after TDS deductions.
Questions:
- Is such an advance salary payment permissible under Indian laws?
- Can a director pay TDS on advance salary received for FY 2025–26 in that same financial year, even though the amount was credited to their savings account in March 2025 (i.e., during FY 2024–25)?
- How should the company record this transaction in its books of accounts?
- Will provisions under Section 185, Section 186, or deemed dividend rules be applicable to this transaction on company?
Thanks in advance