In re Clay Crafts India Pvt. Ltd. (GST AAR Rajasthan)
Clay Craft India Pvt Ltd has filed an application before the Rajasthan bench of the AAR to sought clarification on Whether GST is payable under Reverse Charge Mechanism (RCM) the salary paid to Director of the company who is paid salary as per contract and Whether the situation would change if the Director also is a part time Director in other company.
Company’s key points:
- The company said its directors are working as employees for which they are being compensated by way of a regular salary and other allowances.
- The company is deducting TDS on their salary and PF laws are also applicable to their service.
- directors are the employees of the company and are working as such besides being Director of the company.
Remarks by Authority for Advance Ruling
- The consideration paid to the directors by the applicant company will attract GST under reverse charge mechanism.
- Director is the supplier of services and the applicant of the company is the recipient of the services.
Held by AAR
(a) Whether GST is payable under Reverse Charge Mechanism (RCM) the salary paid to Director of the company who is paid salary as per contract?
The consideration paid to the Directors by the applicant company will attract GST under reverse charge mechanism as it is covered under entry No. 6 of Notification No. 13/2017 Central Tax (Rate) dated 28.06.2017 issued under Section 9(3) of the CGST Act, 2017.
(b) Whether the situation would change from (a) above if the Director also is a part time Director in other company?
Situation will remain same as (a) above and will attract GST under reverse charge mechanism.
