Service tax reverse mechanism

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C.Lakshmananathan

Asst.Manager (Accounts)

23 Points Posted on 08 June 2016

PSI paid to our executive director, that amount is liable to service tax payable or not

Replies (3)

CA Harshal Totla

Chartered Accountant

1575 Points Posted on 08 June 2016

Services by Directors of a body corporate to the body corporate is liable to service tax under under Reverse charge mechanism i.e. body corporate will pay service tax on the value of services provided. The said exemption covers all types of directors.
I hope this will clear your doubt.

Chirag Parmar

Service

77 Points Posted on 08 June 2016

Company is liable to pay tax on services received from directors of the company under reverse charge as a recepient of service under notification no 30/2012- ST dated 20-06-2012.

However, services provided by executive director can be said services provided by employee to the employer in the course of employment which is excluded from the defination of service under section 65B(44). Further, it was held by Hon'ble Gujarat HC in the case of Gautam Sarabhai that Directors can be employee of the company.

So, this entry of notification covers independent as well as nominee directors. Hence, service tax would not be payable by company in case of services received from executive director.