m r gopal (ASSTT GEN MGR(FIN & ACCTS)) (51 Points)
24 July 2012Is Sitting fee paid to directors/independent directors on the Board/Committees for attending meetings are subject to service tax and if so under what head/section. Should the tax be paid by Directors or the Company. could someone throw some light pl.
CA Ganesh Karthik
(Chartered Accountant)
(368 Points)
Replied 24 July 2012
Dear Mr. Gopal,
I would disagree with Mr. Rahul. The sitting fee paid to Independent Directors shall be liable to service tax. Fee paid to executive directors shall not be liable to service tax, since they're generally in the employment of the company.
As per the definition of service, service does not include the service rendered by employees in the course of their employment. Independent Directors are not the employees of the company.
Further, sitting fee paid to independent director is neither there in the Negative List, nor present in the Mega Exemption Notificaiton No. 25/2012.
Hence, according to me, such sitting fee paid to independent directors is liable to service tax.
Others may please offer their comments if they disagree.
Rohan
(Consultant)
(91 Points)
Replied 25 July 2012
The best way to is to check whether for Income Tax purposes these are being shown under the head 'Salary'.
If that is so then it is part of the terms of employement and is outside service tax. Else service tax is leviable on it.
CAclubindia
