Reverse charge on directors remuneration
This query is : Resolved
17 February 2014
Is Reverse service tax applicable on whole time director
18 February 2014
Service tax is not payable in case of Managing Director or wholetime director or executive director, if the director is in full time employment of the company.
.
.
Service tax is payable on services provided by non-executive, nominee and independent directors to the company w.e.f. 1-7-2012.
.
.
Service tax is payable on services provided by non-executive, nominee and independent directors to the company w.e.f. 1-7-2012.
18 February 2014
Section 65B(44) of Finance Act, 1994 as introduced w.e.f. 1-7-2012 reads as follows – “Service” means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include— (a) – - (b) a provision of service by an employee to the employer in the course of or in relation to his employment (c) – - .
Thus, services provided by employee to employer have been excluded from the definition of ‘service’ itself.
.
.
Thus, services provided by employee to employer have been excluded from the definition of ‘service’ itself.
.
.
18 February 2014
It is true that rule 2(1)(d)(EE) of Service Tax Rules inserted w.e.f. 7-8-2012 use the words ‘in relation to service provided or agreed to be provided by a director of a company to the said company, the recipient of such service; shall be person liable for paying service tax.
Notification No. 30/2012-ST dated 20-6-2012 makes provisions relating to reverse charge. Para 1(A)(iva) of Notification No. 30/2012-ST dated 20-6-2012 (as amended w.e.f. 7-8-2012)also uses the same words.
Reverse charge provisions can apply only if a service is otherwise taxable. If a service is not taxable, it cannot be made subject to service tax, as reverse charge provisions are only for collection and payment of service tax. The reverse charge provisions cannot create a service tax liability which is not there under service tax provisions.
Hence, if there is employee-employer relation, then there is no service tax and hence no question of reverse charge can arise.
Notification No. 30/2012-ST dated 20-6-2012 makes provisions relating to reverse charge. Para 1(A)(iva) of Notification No. 30/2012-ST dated 20-6-2012 (as amended w.e.f. 7-8-2012)also uses the same words.
Reverse charge provisions can apply only if a service is otherwise taxable. If a service is not taxable, it cannot be made subject to service tax, as reverse charge provisions are only for collection and payment of service tax. The reverse charge provisions cannot create a service tax liability which is not there under service tax provisions.
Hence, if there is employee-employer relation, then there is no service tax and hence no question of reverse charge can arise.
Message likes :
1 times
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Fixe term employment
- Is any professional CA is here please reply
- GST ITC REVERSE
- Section 50-fixed asset-->building ceases to exist
- Reprocessing of rectification order AY 2025-26
- Tax Audit u/s 44AB for Transport Business A proprietorship is engaged in transportation business and
- EXPORT BILL UNDER LUT FREIGHT CHARGE INCLUED IN INVOICE IT LIABLE TO TAX
- Putting a heading on received mail
- Foreign lottery ticket bought online from India: legality, tax and consequences
- Gift Received from nonblood relative
- Consolidated financials
- Goods sold but invoice not issued
- Tally: Imported bank entries do not show up in manual reconciliation
- Sales of goods of amount Rs97 lakhs to a party
- Confused About My Career After 12th — Cyber Security, AI or Finance? Need Guidance
- STATUTORY AUDIT OF A SMALL PRIVATE COMPANY INCORPORATED ON 28.03.2025
- Guidance Needed: Linking Multiple Form 26QB Payments and Responding to ITD Defaulter Notice
- How to pay remaining amount of TDS after due date?
- Resigning a auditor from the company for misconduct
- RCM @ 5% on Hamali charges, Transport Charges, Unloading charges we take ITC or not
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
