GST on Directors’ remuneration

Central Board of Indirect Taxes and customs vide its circular dated 10th June, 2020 clarified regarding GST levy on Directors’ remuneration, which was a vexing topic in view of the contradictory opinions given by various Tribunals in this regard.

As per this circular, remuneration paid to independent director by whatever name called or to those directors who are not employees of the company are taxable to GST under the reverse charge basis and payable by the company.

Regarding GST on remuneration paid to employee directors like managing directors, whole time directors, executive directors, it is clarified that, that part of the directors remuneration which is classified as salaries in the books of the company and subject to TDS under section 192 of the income tax act – it is not subject to GST

That portion of the directors remuneration, which is not considered as salaries in the books of the company and which is considered as “fees for technical or professional services” and subject to TDS under section 194J of the income tax act is taxable under GST regime.

The copy of the CBITC is given hereunder

https://cbic-gst.gov.in/pdf/Circular-GIC-Approval-Director-Renumeration.pdf

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