APPLICABILITY OF RCM ON DIRECTORS SITTING FEE PAID FOR ITS BOD BY A COOPERATIVE URBAN BANK

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Practicing Chartered Accountant
45 Points Joined January 2013

WHETHER RCM IS APPLICABLE IN CASE OF SITTING FEE PAID TO ITS BOARD OF DIRECTORS BY A COOPERATIVE URBAN BANK

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On 26 May 2025 at 11:21 Report
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Master in Accounts & high court Advocate
9113 Points Joined December 2011

To determine whether Reverse Charge Mechanism (RCM) is applicable on sitting fees paid to the Board of Directors by a Cooperative Urban Bank, let's break down the key points:

Services Provided by Directors - *Director Services*: The services provided by directors can be considered as "services provided by a director of a company to the company" under the GST law. GST Applicability -

 *GST on Director Services*: GST is applicable on the services provided by directors to the company.

Reverse Charge Mechanism (RCM) - *RCM Applicability*: As per the GST law, the recipient of services (in this case, the Cooperative Urban Bank) is liable to pay GST under the reverse charge mechanism when services are received from a director.

Cooperative Urban Bank's Liability - *RCM Liability*: Given that the Cooperative Urban Bank is paying sitting fees to its Board of Directors, it would be liable to pay GST under the reverse charge mechanism. GST Rate -

 *GST Rate*: The GST rate applicable would be 18% (9% CGST + 9% SGST) or 18% IGST, depending on whether the services are intra-state or inter-state.

Conclusion Based on the above analysis, it appears that RCM would be applicable on sitting fees paid to the Board of Directors by a Cooperative Urban Bank. The bank would need to pay GST on the sitting fees under the reverse charge mechanism.

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On 26 May 2025 at 11:40


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