RCM on Rent Paid to directors by Pvt. Ltd Company

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This discussion clarifies whether a private limited company registered under GST must pay Reverse Charge Mechanism (RCM) on rent exceeding £50,000 per month paid to its unregistered directors. Experts suggest RCM is likely applicable if the rent is treated as professional charges, requiring the company to pay GST and deduct TDS under Section 194I. However, if considered director remuneration with TDS under Section 192B, GST under RCM may not apply due to the employer-employee exemption.

Mohith Guptha

Mohith Guptha (Querist)

16 November 2021 Hello Experts,

Following is my questions, request to clarify:

1. Does an Pvt. Ltd. Company registered under GST need to pay RCM on rent paid to unregistered directors of the same company, the rent paid by the company to the directors per month is above 50000 per month.

Thanks in advance

Regards
Mohith

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

16 November 2021 RCM not applicable in case of TDS deducted under section 192 for director remuneration paid.
RCM applicable in case of TDS deducted under section 194J.

CA Altamush Zafar

CA Altamush Zafar (Expert)

18 November 2021 @ R Seetharaman - Rent neither comes under section 192 nor 194J as far as TDS is concerned.
@Mohit Guptha Rent paid to directors will be covered under RCM. The company is not required to pay RCM on rent paid to director.

Udaya Chandran

Udaya Chandran (Expert)

18 November 2021 As per my opinion, rent paid by the company to directors comes under remuneration to directors or it can also be considered as professional charges according to the board resolution. If it is considered as remuneration and TDS deducted u/s 192B then GST under RCM is not applicable as there is an employer and employee relationship which is exempted under GST. If it is considered as professional charges, then the company paying the rent has to pay GST under RCM, also the company has to deduct TDS u/s 194 I for rent paid as it exceeds the annual limit.

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