RCM-Director

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P MURUGAN

ACCOUNTANT

163 Points Posted on 20 December 2024

An individual who is a director of the company let out his commercial property for rent to that company. Further the same director received fees from the same company for his service rendered. My query is that the company will pay GST under RCM for both of the services i. e rental services and fee paid to the director?

Replies (2)

Quick Summary

This discussion clarifies whether a company must pay GST under the Reverse Charge Mechanism (RCM) for two scenarios involving a director. Firstly, when a director rents out their commercial property to the company. Secondly, when the company pays fees to a director for their services. The consensus is that the company is liable to pay GST under RCM for both the rental services and the director's fees, irrespective of the director's GST registration status.

Rama chary Rachakonda

Master in Accounts & high court Advocate

7021 Points Posted on 20 December 2024

Scenario:_ A director of a company lets out their commercial property for rent to the same company.

Additionally, the director receives fees from the company for their services rendered. _

GST Liability:_ For both services, the GST liability under RCM would be as follows:

1. *Rental Services:* Yes, the company would be liable to pay GST under RCM for the rental services received from the director. This is because rental services are covered under the RCM provisions, and the company is the recipient of the service.

2. *Director's Fees:* Yes, the company would also be liable to pay GST under RCM for the director's fees. This is because services provided by a director to the company are covered under the RCM provisions, and the company is the recipient of the service.

_Important Points:_ - The company must pay GST under RCM for both services, regardless of whether the director is registered under GST or not. - The company can claim input tax credit (ITC) for the GST paid under RCM, subject to the usual ITC eligibility criteria. -

The director, as the supplier of services, must also comply with GST regulations, including registration, invoicing, and return filing, if their aggregate turnover exceeds the GST registration threshold.

CA Sachin M Jain

CA | GST | Refunds | Advisory | Litigati

1300 Points Posted on 25 December 2024

" Finally!! End has come to the long drawn confusion among the taxpayers "

Whether a Company is liable to pay GST under RCM on Director Remuneration

📽️ Check out this video on YouTube - https://youtu.be/MY-65yX7-k8

For more details -
CA Sachin M Jain .8O975. l5447

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