Input credit on gst paid in reverse charge.

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This discussion clarifies whether a GST-registered hospital can claim Input Tax Credit (ITC) on GST paid for professional fees to company directors under the reverse charge mechanism. It confirms that ITC is available on director's fees paid via reverse charge. The conversation also weighs the tax benefits of paying directors a salary versus professional fees, suggesting salary payments may be more advantageous from a GST perspective.

Prasad Rao

Prasad Rao (Querist)

13 February 2020 there is a GST registered hospital.
Professional fees is paid to directors of the company who are directors by profession.
Whether ITC is available of such GST?
Whether it is available fully or not?
whether directors should be paid professional fees or salary for avoiding GST burden?

Amol S Joglekar

Amol S Joglekar (Expert)

14 February 2020 Whether to pay salary or professional fee?
In reality it is other way round. In the first place, amount is agreed say 10 lakh per annum. Now the recipient has to decide if s/he wants as professional fee or salary.
In either case the gross amount would remain 10 lakh.

Prasad Rao

Prasad Rao (Querist)

14 February 2020 what if amount is not fixed to be paid?

CA Anita Bhadra

CA Anita Bhadra (Expert)

17 February 2020 ITC is available on the director's fee.
Director's fee is to be paid by the hospital under RCM and full credit is available.
From the GST point of view, salary payment to directors is more beneficial.

Prasad Rao

Prasad Rao (Querist)

17 February 2020 Thank You Anita madam.

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