CA Omendra S Prajapati, Tax Consultant
New Delhi : The Central Board of Indirect Taxes and Customs (CBIC) on Wednesday issued a clarification in respect of levy of GST on Director’s remuneration by Circular No: 140/10/2020 – GST dated 10th June, 2020.
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Director’s remuneration which are declared as “Salaries” in the books of a company and subjected to TDS under Section 192 of the IT Act, are not taxable being consideration for services by an employee to the employer in the course of or in relation to his employment in terms of Schedule III of the CGST Act, 2017.
It is further clarified that the part of employee Director’s remuneration which is declared separately other than “salaries” in the Company’s accounts and subjected to TDS under Section 194J of the IT Act as Fees for professional or Technical Services shall be treated as consideration for providing services which are outside the scope of Schedule III of the CGST Act, and is therefore, taxable.
In respect of such directors who are not the employees of the said company, the services provided by them to the Company, in lieu of remuneration as the consideration for the said services, are clearly outside the scope of Schedule III of the CGST Act and will attract goods and services tax (GST).
The recipient of the said services i.e. the Company is liable to discharge the applicable goods and services tax (GST) on it on reverse charge basis.