Categories: Business

Government has given relief, GST will not be imposed on the salary given to directors of companies


Salaries paid to company directors not to attract GST

new Delhi. The Central Board of Indirect Taxes and Customs (CBIC) on Wednesday said that GST will not be levied on salaries paid to directors working as employees of companies. The CBIC had to issue this clarification following an order from the Rajasthan Authority of Advance Ruling (AAR) in April. The AAR said in this order that companies will have to pay GST on the remuneration paid to their directors. The CBIC has stated that in cases where the directors of the company are paid their wages as professional fees and not as salaries, in such cases on the basis of reverse charge (the buyer himself taxed and deposited it with the government) GST will be levied.

The CBIC has stated that where the directors' remuneration is declared as salary in the company's accounts and TDS is deducted under Section 192 of the Income Tax Act, there is no need to levy GST on such payments made to the directors. It cannot be treated as taxable as services rendered by an employee to his employer under Schedule Three of the Central GST Act 2017.

The CBIC has stated that as far as payments made to independent directors, who are not employees of the company, are concerned. Goods and Services Tax (GST) will be applicable on the payment of remuneration made in lieu of services rendered to the company by such directors.

This post was published on June 11, 2020 9:41 am

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