Director's remuneration

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Querist : Anonymous

Querist : Anonymous (Querist)

10 October 2013 A whole time director holds shares in the company and remuneration is being paid to him/her. Is company liable for sevice tax in regard as some views saysthat he is owner of the company too and does not hold employee relation with the company.

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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10 October 2013 Company is not liable for deducting or paying service tax in this behalf.

Querist : Anonymous

Querist : Anonymous (Querist)

10 October 2013 Sir
Is there any legal case holding the same matter & is Sevice Tax Act contains the same words,if yes,provide me the respective link.

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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10 October 2013 Firstly as per service tax law all service providers have to pay service tax except in case of reverse charge mechanism where the service receiver pays the service tax.

Here director is providing services to Co. so co is the receiver and director is the service provider.

Querist : Anonymous

Querist : Anonymous (Querist)

10 October 2013 Yes sir, i know the same but i want to know is there any case holding the same matter or Service Tax Act contains same as i looked into the act and didn't find the clear details regarding Whole time Director.

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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10 October 2013 Refer the charging section sec 66A, 67,68 and sec 69 of (Service tax)Finance Act 1994, you will get it.

Ganeshbabu K

Ganeshbabu K (Expert)
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10 October 2013 1)Service tax is payable on services provided by non-executive, nominee and independent directors to the company w.e.f. 1-7-2012.

2)Service tax is not payable in case of Managing Director or wholetime director or executive director, if the director is in full time employment of the company.

Ganeshbabu K

Ganeshbabu K (Expert)
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10 October 2013 Why there is no service tax in case of wholetime director in employment of company?

1)Section 65B(44) of Finance Act, 1994 as introduced w.e.f. 1-7-2012 reads as follows –

“Service” means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include—
(a) – -
(b) a provision of service by an employee to the employer in the course of or in relation to his employment
(c) – - .

Thus, services provided by employee to employer have been excluded from the definition of ‘service’ itself.

Querist : Anonymous

Querist : Anonymous (Querist)

10 October 2013 Sir,
If a whole time director holds shares in the company, the above fact is put aside by saying that there is no employee employer relationship as the director is owner of the company. Is there any content satisfying that whole time director is employee of the company.

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