Office No. 5 CTS NO. 335/2, Kirti Bhawan , Sheela Vihar Colony , 3RD Floor, Paud Phata, Pune – 411038

What Is Permissible Managerial Remuneration Of Companies Act 2013

First of all, let’s begin the topic with an easy definition of ‘What Is Remuneration?’ In easy language, remuneration means paying money or something of importance to a person for the service you have taken from that person. Further, managerial remuneration means paying remuneration to managerial bodies in a corporation. After business incorporation, the ‘remuneration’ factor is dealt with by the IT Act 1961.


The Companies Act’s Remuneration Considerations

The company act 2012 states that apart from salary, you can also consider the compensations and rewards paid to any managerial body as a remuneration. According to the company act, you can consider the following expenditure as remuneration. 

  • Pension, gratuity-related expensed, life insurance, annuity.
  • Rent 
  • Expensed relating to vehicle maintenance.

After you get your company registered, it will be compulsory for you to follow these rules. 


Necessary Conditions To Provide Remunerations To The Managerial Bodies


Remuneration Rule

  • A company that has one whole-time director/ managing director.

5% of the company’s net profit.

  • A company that has more than an individual whole-time director/managing director.

10% of the company’s net profit.

  • The overall limit of managing remuneration.

11% of the company’s net profit overall.

It is mandatory for all managing directors to follow these rules after OPC company registration. Even if you are a one-person company, you will have to follow these rules. 

Remuneration To Managers Amount-Wise

Now that you have gone through all the profits of the manager percentage-wise. Let’s move forward with the salary of the managers amount-wise. 

Capital Of The Company – If the capital is lesser than 5 crore

Highest Salary – 30 lakh

Capital Of The Company – If the capital is from 5 crores to 100 crores

Highest Salary – 42 lakh

Capital Of The Company – If the capital is 100 crores to 250 crores

Highest Salary – 60 lakh

What Can Be Done If Your Company Is Facing A Loss

According to the companies Act 2013, if the company is facing a loss, it is not necessary for any directors to pay any sort of remuneration. This rule has been imploded in schedule 5 of the Companies Act 2013.


What Are The Rules If Director Takes Out Excessive Salary? 

If the director is crossing the stipulated limit of the salary without the consent of the central government, the director will have to return the excessive remuneration in the trust of the company. 

How Can We Help You Out?

[company’s name] can assist you throughout your company registration. We can follow up with all the rules and regulations for you. If you want to secure your company legally so that you can run the company without any interruptions, you will get LLP registration. By making us your legal advisor, you can get the assistance of all sorts. Whether GST, consumer complaints, ITR, or company remuneration. 


The gist of this entire blog is that the Companies Act 2013 is extremely strict when it comes to the managerial remuneration act. Also, the company can not pay exceeding the stipulated remuneration limit.