Salary as executive director not considered in Aggregate Turnover for GST Registration and GST on Salary

Last updated: 19 January 2023

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The Karnataka Authority for Advanced Ruling has clarified that income from salary as a Non-executive Director, commercial property rent, residential property rent, and interest earned on loans and advances must be included in your Aggregate Turnover for GST registration purposes. Notably, even exempted supplies like residential property rent count towards this total. However, GST is not applicable to the remuneration received by an Executive Director.

Court :
Karnataka AAR

Brief :
Authority for Advanced Ruling Karnataka held that the incomes received from salary/remuneration as a Non-executive Director of a private limited company, renting of commercial property and renting of residential property and the values of amounts extended as deposits/ loans/ advances out of which interest is being received are to be included in the Aggregate Turnover for registration.

Citation :
IN RE ANIL KUMAR AGRAWAL

DATED: 4. 4.05.2020
IN RE ANIL KUMAR AGRAWAL
KARNATAKA AUTHORITY OF ADVANCED RULING

THE QUESTION INVOLVED

In this case was that which are the income which are to be included in Aggregate Turnover for registration?

FACTS OF THE CASE

The Applicant Mr. Anil Kumar Agarwal was an unregistered person who filed an application for Advance ruling under Section 97 of the CGST Act. He was receiving income from various sources like Salary as a Director from private company, Salary as partner from partnership firm, Income from renting of residential property, Interest on Loans, advances, post office savings, debentures and many more.

JUDGMENT

Authority for Advanced Ruling Karnataka held that the incomes received from salary/remuneration as a Non-executive Director of a private limited company, renting of commercial property and renting of residential property and the values of amounts extended as deposits/ loans/ advances out of which interest is being received are to be included in the Aggregate Turnover for registration.

The income received from the renting of residential property is also to be included in the aggregate turnover, though it is an exempted supply. It was also held that No GST is to be charged on Director's Remuneration of an Executive Director.

FAQ :

Aggregate Turnover is the total value of all taxable supplies, exempt supplies, exports, and inter-state supplies of all goods and services made by a person, their principal, and all their agents under the same PAN.

Yes, income received as salary or remuneration for being a Non-executive Director is included in the Aggregate Turnover for GST registration.

No, GST is not charged on the remuneration received by an Executive Director.

Yes, income from renting residential property is included in the Aggregate Turnover, even if it is considered an exempted supply.

Incomes from renting commercial property and interest received on deposits, loans, and advances are also included in the Aggregate Turnover for GST registration.

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Judgement posted by

FCS Deepak Pratap Singh

Associate Vice President - Secretarial & Compliance (SBI General Insurance Co. Ltd.)

Dear Friends, MyselfFCSDeepak P. Singh ( B.Sc.. LLB, FCS. FIII, CIAFP, CRMP, ID) , A Fellow Member of ICSI, Law Graduate ,Fellow Member of Insurance Institute of India, Certified Independent Director ,Certified Insurance Anti Fraud Professional , Certified Risk Governance Professional ( ICSI-III) and cleared Limited I ... Read more

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