Are you confused about How much money can be taken out from your Private Limited Company as Salary/Remuneration? Here are a few brief hints:
1. If your Articles of Association ( The document which speaks about the bylaws of the company ) has specified an amount which every director can draw. Thats the maximum ceiling
2. Else, If the board has resolved a particular sum to be the maximum amount which can be drawn, thats the ceiling.
3. If not, you can first incorporate the ceiling using by the above means.
4. Then as a director, your remuneration will be restricted to the specified amount.
5. Anything you withdraw over and above the specified amount will be deemed to be dividend.
6. For the specified amount, taxes will be paid by the director.
7. For the Deemed Dividend, taxes will be paid by the company
- Dividend Distribution Tax – A domestic company paying dividend will have to pay dividend distribution tax u/s 115-O. The rate applicable for FY 2010-11 is 15% plus surcharge @ 1.125% plus education cess @ 2% plus SAH education cess of 1% of income tax. Total 16.60875%.
- Dividend distribution tax is payable within 14 days from date of declaration/distribution/payment of dividend whichever is earlier. The dividend will be tax free at the hands of assessees.
- Any amount paid in excess of agreed remuneration will not be considered as deemed dividend, as the same will be taxed only on the following circumstances.
- Accumulated profits
- Distribution entailing release of company’s assets
- Distribution on liquidation
- Distribution on reduction of capital
- Payment as Loans/Advances