Home Case Index All Cases GST GST + AAAR GST - 2021 (1) TMI AAAR This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (1) TMI 849 - AAAR - GSTLevy of GST - Reverse Charge Mechanism - salary paid to Director of the company who is paid salary as per employment contract, after deduction of TDS as well as PF - situation if the Director also is a part time Director in other company also - Challenge to AAR decision - HELD THAT:- The Rajasthan Authority for Advance Ruling (AAR) in IN RE: M/S. CLAY CRAFT INDIA PVT. LTD., [2020 (4) TMI 228 - AUTHORITY FOR ADVANCE RULING RAJASTHAN] pronounced that the consideration paid to the Directors by the applicant company will attract GST under reverse charge mechanism and the situation will remain the same if the director is also a part time director in another company. The CBIC has recently issued a Circular No. 140/10/2020 - GST dated 10.06.2020 under File No. CBEC-20/10/05/2020 -GST and clarified the issue in appeal. It has been clarified that (i) remuneration paid by companies to the independent directors or those directors who are not the employee of the said company is taxable in hands of the company, on reverse charge basis; and (ii) the part of 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. Further, in terms of notification No. 13/2017 - Central Tax (Rate) dated 28.06.2017, the recipient of the said services i.e. the Company, is liable to discharge the applicable GST on it on reverse charge basis. The remuneration, if any, paid by the appellant to the independent directors or those directors who are not the employee of the appellant is taxable in hands of the appellant, on reverse charge basis. Further, the part of Director’s remuneration which are declared as Salaries in the books of the appellant 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. The part of employee Director’s remuneration which is declared separately other than “salaries” in the appellant’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 and in terms of notification No. 13/2017 - Central Tax (Rate) dated 28.06.2017, the recipient of the said services i.e. the appellant, is liable to discharge the applicable GST on it on reverse charge basis.
|