Directors
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
02 August 2012
WHETHER SERVICE TAX IS APPLICABLE ON COMMISSION WHEN THE DIRECTOR RECEIVES SALARY AND COMMISSION
RENGARAJ R.K
(Expert)
02 August 2012
There are two types of directors in a Company, one is wholetime director and another is independent director including Government participation and foreign representation.
The WTDs are executive directors of the company and are therefore employees of the company. Employee -Employer services are in the negative list.
In my opinion,as per the new definition available as on date, fees, commission and remuneration paid to WTDs will not be covered. Whereas non-executive directors will have to pay service tax for the sitting fees, commission received from the company in his independent capacity when his individual income crosses the threshold limit. He can raise a bill on the company charging the applicable service tax.
For foreign directors, the company has to pay the service tax under reverse charge for all the sum received from the company. There is no service tax for Government nominated directors.
This is the present status but new notification is awaited from the CBEC for this particular issue, shortly.
The WTDs are executive directors of the company and are therefore employees of the company. Employee -Employer services are in the negative list.
In my opinion,as per the new definition available as on date, fees, commission and remuneration paid to WTDs will not be covered. Whereas non-executive directors will have to pay service tax for the sitting fees, commission received from the company in his independent capacity when his individual income crosses the threshold limit. He can raise a bill on the company charging the applicable service tax.
For foreign directors, the company has to pay the service tax under reverse charge for all the sum received from the company. There is no service tax for Government nominated directors.
This is the present status but new notification is awaited from the CBEC for this particular issue, shortly.
RENGARAJ R.K
(Expert)
14 August 2012
The new notificaton is released. Please see Notn no.45 &46/2012-ST dt 07.08.2012, as stated in my reply.
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