Dear Sir/Mam, In my last query mentioned in link-
https://www.taxwallah.com/questions/question/gst-on-director-service/
Payment to full time / executive director booked as salary is not subject to GST. Thus no RCM.
Query- I think that Sitting fees paid to director (M.D., WTD) i.e. director who is an EMPLOYEE, WILL BE SUBJECT TO GST under RCM by the company . This is because of as per Para 5.4 of Circular No- 140/10/2020- GST, wherein it is mentioned that — 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. ‘
Conclusion-
- Director’s salary/remuneration to a director who is employee, is NOT subject to GST.
- But any other remuneration like sitting fees EVEN TO EMPLOYEE DIRECTOR, WILL REQUIRE THE COMPANY TO PAY GST UNDER RCM @ 18%.
- SITTING FEES TO INDEPENDENT DIRECTOR IS ALSO TAXABLE UNDER RCM @ 18%.
PLS CONFIRM WHETHER I AM CORRECT ?? IF NOT, PLS TELL CORRECT ??
Thanks ..
Generally sitting fee is NOT paid to employee / executive director and paid only to independent / nominee / non executive Directors. Even articles of Companies prohibit for such payment. However if paid and not charged to salary, same will be subject to GSt under RCM as per extant Circular.
Sitting fee to independent director absolutely covered under RCM.
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