14 September 2013
ICAI PRESIDENT, CHAIRMAN INCOME LIABLE TO SERVICE TAX if work done in professional capacity. As service tax exempt regulatory body member, chairperson, director (not an employee) from service tax .
28 July 2024
Under the Service Tax regime, the income of individuals holding positions such as President, Chairman, or other similar roles in professional bodies like ICAI (Institute of Chartered Accountants of India) needs to be assessed to determine whether it is subject to Service Tax. Here’s a detailed explanation:
### **1. Understanding Service Tax Exemption**
#### **A. Regulatory Bodies Exemption** - **Service Tax Exemption**: Under Service Tax rules, certain services provided by or to regulatory bodies are exempt. Specifically, services provided by regulatory bodies set up by the government to regulate professions or industries are often exempt from Service Tax. - **ICAI’s Status**: As ICAI is a statutory body established by an Act of Parliament, its functions are generally considered regulatory in nature. Therefore, ICAI's activities are typically exempt from Service Tax under the provisions related to regulatory services.
#### **B. Exemption Criteria** - **Regulatory Functions**: If the services performed by the ICAI President, Chairman, or similar officials are in the nature of regulatory functions and fall under the ambit of their official capacities, they are likely exempt from Service Tax.
### **2. Income and Service Tax for ICAI Officials**
#### **A. In Professional Capacity** - **Professional Services**: If the President, Chairman, or other officials are providing services in a professional capacity that is not part of their role within ICAI (e.g., consulting or advisory services outside of their official duties), such services might not be exempt. - **Professional Capacity**: Services rendered outside of their regulatory roles, such as consultancy or advisory roles for which they are compensated separately, would generally be considered taxable under Service Tax if they fall within the taxable services category.
#### **B. Non-Employee Status** - **Not Employees**: If these individuals are not employees of ICAI but are serving in an honorary or non-executive capacity, and the remuneration is provided as part of their official role within ICAI, the exemption is likely applicable. - **Honorary Positions**: Honorary or part-time roles that involve regulatory functions typically fall under the exemption. However, any additional consultancy or advisory work performed outside of their role may be subject to Service Tax.
### **3. Specific Scenarios**
#### **A. Service Provided Within ICAI** - **Regulatory Role**: If the President, Chairman, or other officials are performing their duties as part of their role within ICAI and these duties relate to regulatory functions, the income from these roles is generally exempt from Service Tax.
#### **B. Additional Services** - **Consultancy or Advisory Services**: If these individuals are involved in providing consultancy or advisory services outside their official ICAI roles, this income may be liable to Service Tax if these services fall under taxable categories.
### **4. Practical Considerations**
#### **A. Documentation and Compliance** - **Verify Exemption**: To ensure compliance, it's important to verify whether the specific services and roles are covered under the regulatory exemption. - **Consult with a Tax Professional**: For precise clarification and to ensure proper compliance, consult with a tax professional or legal advisor who can review the specific details of the roles and services provided.
### **5. Summary**
- **Regulatory Role Exemption**: Services performed as part of regulatory functions within ICAI are typically exempt from Service Tax. - **Non-Regulatory Services**: Any additional professional services provided outside of official ICAI roles may be subject to Service Tax. - **Verification Needed**: Consult with a tax professional for confirmation and detailed compliance.
By understanding these distinctions and consulting with a professional, you can ensure that the income and services of ICAI officials are appropriately categorized and comply with Service Tax regulations.
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