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Reviewed by CA Divyanshu Sengar · Last reviewed 11 October 2026
Enter the net profit computed under section 198 and the proposed remuneration to see how it compares with the overall 11% limit and the individual percentage limits for managing or whole-time directors and other directors.
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For a public company, Section 197 uses net profits computed as specified by Section 198, not simply profit after tax from the financial statements or operating EBITDA. The starting information matters because an incorrect profit base can generate a materially wrong apparent ceiling. The calculator requires the user to provide an already-computed Section 198 number, leaving statutory adjustments outside this simplified engine.
The general aggregate reference for relevant public-company managerial remuneration is 11% of Section 198 net profits, subject to approvals and the conditions in the law. Without the additional specified approvals, one MD/WTD/manager ordinarily has a 5% reference, more than one such managerial person has a combined 10% reference, and other directors have a 1% reference where there is an MD/WTD/manager or 3% otherwise. These are not simple absolute prohibitions; the applicable approvals and Schedule V conditions matter.
A public company has Section 198 net profits of ₹1 crore and proposes ₹4 lakh for a single managing director and ₹90,000 for non-executive directors. The illustrative general 11% aggregate reference is ₹11 lakh, individual MD reference ₹5 lakh, and non-executive reference ₹1 lakh. Those amounts sit within the listed base limits. A different result can occur if independent remunerated services, sitting fees, secured creditor defaults or specific approvals are relevant.
For nil or inadequate profits, the normal positive-profit percentages do not serve as a remuneration calculator. The route moves to Schedule V and company-specific resolution and regulatory controls. This tool therefore refuses to issue an apparently valid positive-profit cap in that circumstance. Confirm remuneration components, sitting fees, creditor-default permissions and disclosures before final board and shareholder approvals.
Distinguish remuneration paid to a managing director, whole-time director and manager from non-executive director remuneration and sitting fees. Section 197 contains specific provisions for determining what is included or excluded; general ledger classifications alone may not settle the question. The model has separate executive and non-executive amount fields so approvals can be reviewed at the appropriate level, but it does not certify each remuneration component.
Even when the basic aggregate percentage appears within 11%, a company may need more targeted approval for individual or other-director limits. Where Section 198 profit is nil or inadequate, Schedule V provides the relevant framework rather than a percentage of a negative number. Defaults to relevant secured creditors can introduce prior approval requirements. Record the year of profit computation, director categories, resolutions and creditor status to create a supportable board paper.
Only with the approvals and conditions the Act allows, and in the case of inadequate profits within Schedule V. Exceeding the basic limit is a trigger for review, not an automatic breach.
Sitting fees to directors are treated separately from the percentage limits. Check how the section and rules treat them in your case.
Section 197 is framed for public companies; private-company remuneration should follow applicable governance rules.
The Act provides conditional approval routes subject to Schedule V and other requirements.
The model directs the case to Schedule V, rather than manufacturing a percentage-based cap.
Rates and rules were checked against these sources on 11 October 2026. Notifications and standards change; confirm on the official site before you file, book or advise.
Educational working tool. Results follow the scope and assumptions above and the figures you enter; they are not tax, audit, legal or accounting advice. Tax and accounting treatment depends on facts and on the law or standard in force for the relevant period, so verify the official source or consult a professional before you rely on a result.
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