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Recent Advance Ruling

10 April 2020

There is a recent Advance rule ng dated 20/02/2020 of Rajasthan. Saying when a company pays salary to a director Gst shall be levied. But according to schedule 3 if there is employer and employee relationship, no GST shall be levied.
Is this advance ruling correct or
Is that director doesn't come under employer employee relationship for a company. If yes , then what constitutes employer employee relationship?

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8 Replies

Rajkumar Patel (602 Points)
Replied 11 April 2020

If condition for Deducting TDS u/s 192 of income Tax except minimum limit for non tds in this section than You not need Apply GST on such payment and covered under scope of schedule 3

RAJA P M ("Do the Right Thing...!!!") (127058 Points)
Replied 11 April 2020

@ Mr Rajkumar Patel.,

Can You elaborate with some more details for Your reply please...?!

Pankaj Rawat (GST Practitioner) (55030 Points)
Replied 11 April 2020

Rajasthan -Advance Ruling No. RAJ/AAR/19-20/33
Rajasthan Authority for Advance Ruling & Clay craft Pvt Ltd (Petitioner) .

The ruling was : Consideration paid to director (whole time) by the applicant company attracts GST under the RCM & cover Under Notification 13/2017 CT (R)

The Ruling is absolutely absurd & Not according to ACT , means the RCM attracts when the consideration paid to Sitting Director not on whole time Director. Moreover the Ruling is applicable only to Applicant Company & applicant will definitely challenge vires of such Notification/ruling to AAAR.

In fact there is complete writeup/article on remuneration paid to director By Taxman , so go through the same which says it's not cover under GST

RAJA P M ("Do the Right Thing...!!!") (127058 Points)
Replied 11 April 2020

Yes... I'm also the same view.

Can You define the difference between "Rajasthan Authority for Advance Ruling & Clay craft Pvt Ltd
and
"The Authority on Advance Ruling in Karnataka & Alcon Consulting Engineers (I) pvt Ltd"...

Pankaj Rawat (GST Practitioner) (55030 Points)
Replied 11 April 2020

Dear Mr Raja Ji
The difference in both is only the AAR ruling in regard to Clay Craft Pvt ltd is the latest one.

Rajkumar Patel (602 Points)
Replied 12 April 2020

On my opinion, if director provides services in capacity other than directorship in company than GST is attracted on payment for such services.... e.g. payment of sitting fees, professional services like Technical services, Agent service

Pankaj Rawat (GST Practitioner) (55030 Points)
Replied 12 April 2020

Dear Rajkumar
Yes you are correct , thats what we are saying that above ruling is not correct

CS Lalit Rajput (Company Secretary) (33618 Points)
Replied 12 April 2020

“This ruling needs to be clarified by government, otherwise, lower authorities may take legally incorrect view creating havoc in the business community.”

The Question still exists:

Whether all the services provided by the director shall be covered by the RCM provisions or RCM is only restricted to the services provided by a director in the capacity of a director?