In the case where director has given on rent his premises to the Company in which he is Managing Director. The Company is using the premises as rented office from director in such case whether service tax will be payable by the Company on reverse charge basis.? As director's services to the company is taxable service. Whether renting of office by director is covered under director's service to the company and whether company is liable to pay service tax on reverse charge basis?
4 Replies
CA Neelam Maheshwari
(internal Auditor)
(497 Points)
Replied 30 January 2015
The company is liable to pay
ST on RCM only on those services which are provided by the director in the capacity of
director . When your company pays rent to
director , he receives it in the capacity of
Owner of property not for being the director of
company.
Venkatanarayana GM
(Partner associate at Hiregange & Associates)
(1279 Points)
Replied 31 January 2015
Renting services will not come under the purview of reverse charge mechanism.
However, if such rental income exceeding above 10 lakhs, then the director will have to charge at 12.36% on gross amount.
Thanks.
Soham
(Learning )
(534 Points)
Replied 31 January 2015
- No RCM provision is applicable on Renting of Premises by Director as Director is in capacity of Property owner and not Directorial service .
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