Remuneration to Directors of a private limited company

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This discussion clarifies the Goods and Services Tax (GST) implications for remuneration paid to directors of a private limited company. Reverse Charge Mechanism (RCM) applies to part-time or independent directors, effective from July 1, 2017. Full-time directors, considered employees, are exempt from RCM. The company can claim input tax credit (ITC) on GST paid under RCM for director remuneration.

R S Sai Kumar

R S Sai Kumar (Querist)

10 February 2020 1. Is RCM - under GST applicable to the remunertion paid to the directors of a company?
2. If yes what is the rate and from when applicable.
3. The income of the company is lease rental income only.
4. Whether the company can claim input of RCM paid on directors remuneration.
Please repy
Sai

CA Anita Bhadra

CA Anita Bhadra (Expert)

10 February 2020 If director is a full time director working in the capacity of an employee , RCM is not applicable .
Otherwise , for part time directors/ independent director - remuneration is to be paid under RCM .
It is applicable w.e.f. 01.07.2017.

CA Anita Bhadra

CA Anita Bhadra (Expert)

10 February 2020 Company can take ITC , if GST paid on director's remuneration under RCM

R S Sai Kumar

R S Sai Kumar (Querist)

10 February 2020 Thank you Madam
Sai

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