Categories: Business

Payment to directors by companies is now under GST

Image Source: PTI

new Delhi. Payment in the form of fee to directors of companies which is of a different nature from salary, will now be subject to Goods and Services Tax (GST). The government is working to remove the shortcomings of the tax system to increase collections. The Central Board of Indirect Taxes and Customs (CBIC) has stated in a circular that the payment made by companies to independent directors or non-executive directors (not employees of the company) will be subject to the applicable GST rate.

CBIC has stated that companies will deduct tax on reverse charge basis on payments made to such directors for their service. Apart from this, remuneration paid to full-time directors or directors who are also employees of the company will also be subject to GST conditional.

This means that directors, full-time directors, managing directors, who are also on the rolls of a company and take salary, will be subject to GST if they receive any kind of remuneration which is not of the nature of salary. However, there will be no GST on the salary paid to such directors.

Mekhala Anand, partner, Cyril Amarchand Mangaldas, said, "This clarification regarding the remuneration paid to directors under various laws will provide clarity on the rules. The resolution of this issue will give the industry the right signal, which is Kovid-19 Is focusing on regaining its momentum after the crisis. "

This post was published on June 11, 2020 6:30 pm

Content Team

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