Private-limited owner — route expenses through the company & save tax

The principle

A private limited company is a separate taxpayer (~25%, or 22% under 115BAA). A rupee it spends on a genuine business expense or employee benefit reduces its profit — and if that spend also benefits you as a director-employee, you've moved a personal cost into a deductible one. The rule: it must be genuinely for the business or a genuine employee benefit (Section 37 — wholly & exclusively for business). Personal spending dressed up as business is disallowed and risky.

The levers

• Director's remuneration (KMP salary): pay yourself a salary — deductible in the company, and structured with exempt components (HRA, LTA, NPS, reimbursements) it beats drawing profit as dividend (dividend isn't deductible and is taxed at your slab).
• Employer NPS — 80CCD(2): the company puts up to 14% of your salary into your NPS — deductible for it, and you get the deduction even in the new regime.
• Group health insurance: the company pays mediclaim for employees (including you) — deductible, and not a taxable perquisite for a group policy.
• Company car: a car owned/leased by the company attracts only a nominal perquisite (₹1,800–2,400/month) while depreciation, fuel, driver and insurance are deductible.
• Home-office / premises rent: the company rents your property and pays you — deductible for it; rental income with a 30% standard deduction for you.
• Family on payroll: employ a spouse/adult child who genuinely works — deductible salary taxed at their lower slab (reasonable pay only — Sec 40A(2)).
• Director's loan interest: lend to the company and draw deductible interest (36(1)(iii)) instead of non-deductible dividend.
• Reimbursements: actual business travel, phone, internet, client meals — deductible for the company, not taxable for you.
• Assets & depreciation: laptops, furniture, equipment used for business — bought in the company's name, deductible via depreciation.
• Retirement: gratuity, PF, superannuation contributions — deductible and build your exempt corpus.
• Keyman/D&O insurance, subscriptions, training: deductible business costs.

Salary vs dividend

Profit taken as dividend is taxed at your slab with no deduction in the company. The same amount as salary/remuneration is deductible and can be structured efficiently in your hands — usually the better route, balanced against keeping some profit taxed at the low 22%/25% company rate.

Stay on the right side

• Every expense must be genuine and for business — keep invoices, board resolutions and agreements.
• Payments to relatives must be reasonable (Sec 40A(2)).
• Value and report perquisites correctly; deduct TDS where due.