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Rcm on directors' salary

ashish shah (VP Finance) (29 Points)

03 December 2016

We are a group of Companies and are paying salary to our Whole Time DIrector (WTD). He is also getting salary as WTD from other associate company. From both the Companies, he is getting salary and getting TDS deducted under section 194 (salary). Service Tax dept says that any one company can be exempted from Reverse Charge on directors' remuneration. Is their claim justified??

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3 Replies

Sunil Kumar (Indirect Taxation ) (1246 Points)
Replied 03 December 2016

The contention of the department seems to be correct. In term of companies act, 2013, a person can be the WTD of one company. There are certain exceptions to this rule for example subsidiary and holding can have same WTD.

It would be better if you post this query in company law forum to understand the exceptions. It enables you to find out further strategy to defend.

ashish shah (VP Finance) (29 Points)
Replied 03 December 2016

Thank you Sir for your reply. Even if he is not WTD in other company, our stand does not change. We are paying him salary and deduct TDS under section 192 only and in his own ITR, income gets reflected under Salary Head only. Can we not justify employer-employee relationship when a person is simply a director and getting salary from Company??