- The CBIC has issued a clarification on whether remuneration paid to directors falls under the reverse charge mechanism of GST. The circular provides 12 simplified pointers to determine whether GST should be levied on remuneration paid to directors.
- According to the circular, remuneration paid to independent directors falls under the reverse charge mechanism and is subject to GST. Non-executive directors, who are not full-time directors of the company, are not employees and any services supplied by them for which they receive remuneration will attract GST on a reverse charge basis.
- Executive directors who receive salaries subject to TDS under section 192 are not taxable under GST. Remuneration, fees or commission declared separately and subject to TDS under section 194J are liable to GST under reverse charge. Directors who provide services in capacities other than as directors are liable to pay GST under forward charge if they cross the threshold limit of aggregate turnover in FY for registration.
- Sitting fees paid to directors under section 197(5) of the Companies Act, 2013 will attract GST on reverse charge basis, as the same is subject to TDS under section 194J(1)(ba).
Source Taxguru
