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Sitting fees

CA Pramod Jain (manager finance) (1577 Points)

04 January 2013

If we are paying 1000/- cheque to non-excutive directors as director sitting fees.

at what rate n on what amount service tax needs to be paid by company, means whether (1000*12.36%) 112.36 Service tax liability of company or else. and under what head service needs to be paid.

Also TDS on which amount needs to be deducted on Rs.1000/- or Rs.1112/- inclusive of service tax.

pl confirm

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6 Replies

Ashwani Narnoli (.) (1843 Points)
Replied 04 January 2013

as far as i am concerned service tax shall not be charged on payment of sitting fees to directors.

Ashwani Narnoli (.) (1843 Points)
Replied 04 January 2013

I have to make a correction. Service tax will be required to be paid and TDS should be deducted on the amount inclusive of Service tax

Sumit Grover (Chartered Accountant ) (3652 Points)
Replied 04 January 2013

In my opinion, Service tax shall be charged on sittings fees paid to non-executive directors, since the same has come within ambit of service tax w.ef. 7-Aug-2012, by virtue of notification 45/2012 issued by CBEC.

Hence, the company shall be liable to pay service tax @ 12.36% on service tax under reverse charge mechanism.

Further, TDS shall also be deducted on sittings fees paid to directors u/s 194J @ 10% on amount exclusive of service tax (since that portion of service tax is noyt payable to director)

and following journal entries shall be passed.

Sitting fees Exp. A/c Dr. 10,000

To Bank A/c 9,000

to TDS PAYABLE 1,000(10% of 10,000)

If the co. is eligible for CENVAT

CENVAT -Reverse charge A/c Dr. 1,236

To Service tax liability(reverse charge) 1,236

2 Like

CA Pramod Jain (manager finance) (1577 Points)
Replied 04 January 2013

in chalan under which head service tax to pay

kavitha (studying final) (830 Points)
Replied 04 January 2013

business auxillary services or management consultant services i think

Vikas (CA) (1135 Points)
Replied 04 January 2013

Since, this category is not pre-existing the same can be paid in the residual 120th category, as can be found in the list of services in the latest Circular No.165.