The remuneration factor is not as easy as it seems. Remuneration means money or something extra that is given to a particular person for the service taken from that particular person. The IT Act 1961 deals with the ‘Remuneration’ factor after incorporating a business.

Permissible Managerial Remuneration Under Companies Act 2013

You can have a look at the managerial remuneration that a company is liable to pay to the Managing Director, Whole-Time Director, Part-Time Directors and all the other persons.

The Companies Act 2013 says that not only the salary, the rewards and compensation paid to the manager can also be considered as the remuneration. You can have a look at the expenditures that are considered as remuneration as per the Companies Act.

1. The rent will be considered as the managerial remuneration
2. Life insurance, pension, annuity, gratuity focused expenses
3. Vehicle maintenance-related expenses

The Companies Act 2013 depicts these points as the permissible managerial remuneration. So, after the company registration, a company has to follow these particular rules.

Condition Required for Providing Remuneration to Managers

You can look at the three points that are necessary for providing remuneration to managers.

This rule is mandatory to all the Managing Directors, even for the One Person Company director after OPC Company registration.

Amount Wise Remuneration to Managers 

You have checked the percentage-wise profit of the managers. Now, you can have a look at the amount-wise managerial salary.

What to Do When The Company is Going Through Loss

The Companies Act 2013 says that neither the managing director nor the whole-time director or any director is required to pay any remuneration if the company is going through a loss. This rule is stipulated in the Companies Act 2013 as per Schedule 5.

What’s The Rule If The Director Draws Excessive Salary

If a director receives an excessive salary from the stipulated limit without taking consent from the Central Government then as per the rule, the extra remuneration has to be returned by the director in the company’s trust.

In no way, a director or manager can receive an extra salary from the company.

How Can Online Legal India™ Help You?

The Online Legal India™ can help you with every rule that is necessary for company registration. After LLP  registration, you can be legally secured to progress your company in a free manner.

So, when you have assistance from Online Legal India™ experts, you can get all types of assistance like ITR, GST, company incorporation, consumer complaints and so on. 

Conclusion

The Companies Act 2013 is very strict with the managerial remuneration act. As per the rule, a company cannot exceed the 11% rule while providing salary to the managers and directors.