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Explain GST on directors remuneration with example

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Rajkumar Malik

28 Points Posted on 10 April 2020

GST on Directors remuneration

Replies (6)

Quick Summary

This discussion clarifies the applicability of GST on director remuneration, particularly concerning Reverse Charge Mechanism (RCM). While RCM is generally applicable, there's a distinction made for remuneration paid to whole-time directors, where GST might not apply due to an employer-employee relationship. However, a Rajasthan AAR ruling suggests GST is applicable to director remuneration, even for working directors, though the scope of such rulings is limited.

RAJA P M

"Do the Right Thing...!!!"

77792 Points Posted on 10 April 2020

Rcm applicable on director's remuneration. GST rate @ 18%.

Pankaj Rawat

GST Practitioner

29904 Points Posted on 10 April 2020

No RCM is applicable on remuneration paid to Whole time director.

RAJA P M

"Do the Right Thing...!!!"

77792 Points Posted on 10 April 2020

Dear Mr Pankaj Rawat Ji.,

What about Your reply against AAR by Rajasthan bench of the AAR, Clay Craft India Pvt Ltd

https://m.economictimes.com/news/economy/policy/remuneration-paid-to-directors-to-attract-gst-aar/articleshow/75030502.cms

Spurto Consultancy Services

Consultant

1366 Points Posted on 11 April 2020

RCM is applicable in case of remuneration paid to directors. Company was liable to pay GST.

Further, its opined that since there is employer employee relationship between company and directors hence GST is not applicable in case of working directors.

However the Rajasthan bench of AAR has said that Remuneration paid to directors to attract GST.

Pankaj Rawat

GST Practitioner

29904 Points Posted on 16 April 2020

Dear Mr. Raja ji

yes you are correct ....but you yourself know the ruling is not correct &moreover applicability of ruling is limited to who sought application for the same .