RCM

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This discussion clarifies the application of Reverse Charge Mechanism (RCM) on director remuneration. While services provided by a director to a company are generally taxable, remuneration paid as a salary to a permanent employee director is exempt from RCM. However, other services, such as sitting fees for independent directors, are subject to RCM at an 18% interest rate. The conversation also touches upon the applicability of AAR rulings, specifically the Clay Craft India Pvt Ltd case, and questions its legal standing when applicant arguments aren't considered.

ranjeev kumar

ranjeev kumar (Querist)

09 April 2020 Please clarify RCM application on director remuneration paid by the company read with notification 13 of 2017

CA Anita Bhadra

CA Anita Bhadra (Expert)

10 April 2020 Service by the Director to the company is taxables but if the Director is a permanent employee of the company, remuneration paid to him as a salary is not subject to RCM.

Any other services ( Sitting Fee etc ) by Independent directors etc are subject to RCM

RAJA P M

RAJA P M (Expert)

10 April 2020 Rate of Interest @ 18%

RAJA P M

RAJA P M (Expert)

10 April 2020 @ CA ANITA BHADRA., Madam, I saw Your reply after my reply. so sorry for the attention... But, What about Your reply against AAR by Rajasthan bench of the AAR, Clay Craft India Pvt Ltd

Nilesh

Nilesh (Expert)

21 April 2020 Decision of AAR is applicable to applicant. You will appreciate that AAR ruling is not considered arguments of applicant and in my view AAR ruling is not good law

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