Can anyone explain the below paragraph in detail.
As per yesterday's amendment, payment to director has been added to list of services where the "Recipient" of services has to pay directly service tax to Govt rather provider of the service. Like in case of import of services from abroad, the service receipt sitting in India is supposed register himself with service tax authorities as "Service Receiptient' and to mark-up the import service invoice and pay the service tax to govt of India.
Accordingly in case of payment to director, the company making the payment to director is required to register itself as "Service Recipient" and mark-up payment by 12.36% (the invoice amount, if any, raised) being made to the director and pay the 12.36 % to department directly by using it service tax code allotted by the department under category of "service recipient" before 5th of subsequent month and file half yearly returns accordingly.
As per our understanding, this is something like dividend distribution tax payable by the company while declaring dividend.
The Govt. does not want to lose the service tax -revenue payment made to director (the provider) even if director does not fall under service tax turnover (10 lakhs per annum) bracket.
CAclubindia
