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Retainership Fees

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Anshuman Basu

account -GST

1181 Points Posted on 05 May 2020

Mr Roy is a director (URD) of the GST Registered company M/s XYZ. He is received Rs 150000/- as Director Remuneration and Rs 50000/- Received as Retainership Fees From Company.

Now Question is

1. What are the GST Treatment of Director Remuneration and Retainership Fees in point of M/s XYZ?

2. Is both service are fall in RCM?

3.Can the company claim ITC?
please help

Replies (4)

Quick Summary

This discussion clarifies the Goods and Services Tax (GST) treatment for payments made to company directors. It differentiates between director remuneration and retainership fees, explaining that GST liability, particularly under the Reverse Charge Mechanism (RCM), depends heavily on the director's contractual capacity and employment status. Whole-time directors, often considered employees, may be exempt from GST under Schedule III, while sitting directors providing services not covered by the employer-employee relationship could be subject to RCM. The availability of Input Tax Credit (ITC) is also discussed in relation to these taxable supplies.

CA Altamush Zafar

GST Consultant

10402 Points Posted on 05 May 2020

With respect to taxability it highly depends on the contractual terms as to in which capacity is the person giving the services.
Where tax is liable to be paid under RCM then ITC is available in full provided the fact that the outward supplies should be taxable.

Vinitha

Student

27 Points Posted on 06 May 2020

It is firstly important to know if the Director is a whole time employee and as to whether he is enjoying all the benefits applicable to an employee as per the employment contract.

If he is a whole time director den he is clearly an employee of the company. In such case there is employer employee relationship. GST may not b liable on the fees paid by the employer to Director.

So, it is imperative to first understand the contract between Director and the company

Pankaj Rawat

GST Practitioner

29904 Points Posted on 06 May 2020

If whole time Director : No GST liability as cover under Schedule III

If Sitting Director : GST is applicable on RCM

CA Akshay Hiregange

Partner - Audit & Assistance

3708 Points Posted on 06 May 2020

Services provided in the capacity of the director but not covered under Schedule III (employer-employee relationship) can be considered for RCM liability. Reference to TDS u/s 192 can be made.