Are payment to Directors liable for RCM under GST ?

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Replies (3)
RCM is applicable in case of sitting fees or commission is received by a director other than whole time director.

Everything paid to director by a company, not as a part of CONTRACT OF SERVICE covered under R.C.M under G.S.T.

Example 1: Sitting fee is payable to directors for attending meetings of board/committee. I.e. Non-executive directors receive sitting fee, if authorized by A.O.A, even though they are not in the course of employment with company. Indeed, sitting fee may also be payable to Whole time directors/Executive directors (nothing contained u/s.197(5) bar from payment of sitting fee to whole time directors by virtue of A.O.A).  Hence, in cases where payment of sitting fee is first authorized by the articles and later payment of sitting fee is made as a part of CONTRACT OF SERVICE then by virtue of A.O.A, Sitting fee paid to whole time director covered under R.C.M under G.S.T

Example 2: If commission paid is as a part of  contract of service then company has to pay G.S.T on R.C.M. Otherwise, i.e. payment of commission is not included in CONTRACT OF SERVICE  then such payment attract R.C.M

Example 3: Service rendered by whole time/ordinary director in professional capacity covered under R.C.M. Director of company provided technical consultancy services then R.C.M shall apply

 

 

In most of the cases, A.O.A does not provide for payment of sitting fee to whole time directors/executive directors (As they have been receiving director remuneration already). But nothing contained in any provision under Companies Act,2013 bar you from making payment of sitting fee to whole time directors. If articles provide for payment 

Agreed with pankaj sir

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