As per the S.No. 6 of Notification No.13/2017 – Central Tax (Rate) dtd. 28.June.2017, following entry is given
- Category of Supply of Service: Services supplied by a director of a company or a body corporate to the said company or the body corporate.
- Supplier of Service: A director of a company or a body corporate
- Recipient of Service: The company or a body corporate located in the taxable territory.
As per the above GST under RCM to be paid for any payment made by company to its director.
Following Confusion arises among the industry:
- Whether GST is leviable on Director Remuneration by the companies to their directors.
- Is GST under RCM is to be paid on all payments made to director.
- Is GST under RCM to be paid on payment made to Managing directors or all director.
Due to this Confusion government come with a circular no. 140/10/2020-GST dtd.10th June 2020 regarding Clarification in respect of levy of GST on Director’s remuneration – Reg.
Analysis of the above clarification is as follows:
| S.No. | Nature of Relationship | Applicability of RCM |
| 1 | Director Not an Employee of the Company | Yes |
| 2 | Managing Director (Employee) | No |
| 3 | WTD (Employee) | No |
| 4 | Independent Director as per Sec 149(6) of companies Act, 2013 | Yes |
| 5 | Director (TDS is deducted u/s192 i.e. TDS on Salary) | No |
| 6 | Director (TDS is deducted u/s194J i.e. TDS on Professional Service | Yes |
| 7 | Contractual relationship of Master and Servant. | No |
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