GST won’t be levied on salaries paid to directors of companies

The Central Board of Indirect Taxes and Customs (CBIC) on Wednesday said that GST won’t be levied on salaries paid to directors working as employees of companies. The Advance Ruling (AAR) had to be issued after an order came in April.

The AAR said during this order that companies will need to pay GST on the remuneration paid to their directors. The CBIC has stated that where the remuneration of the administrators of the corporate is paid to them as professional fees and not as salary, in such cases GST is going to be levied on the idea of ‘reverse charge’ (buyer is taxed by the govt himself).)

The CBIC has stated that where directors’ remuneration has been declared as’ salary ‘in the company’s accounts and TDS is deducted under Section 192 of the tax Act. Such payments to directors aren’t taxable. It can’t be considered taxable as services rendered by an employee to his employer under Schedule-3 of the Central GST Act 2017.

The CBIC has stated that as far as payments made to independent directors are concerned, who aren’t employees of the corporate. the products and Services Tax (GST) is going to be applicable on the payment of remuneration made in lieu of services rendered to the corporate by such directors, as far as payment is formed to independent directors who aren’t employees of the corporate. the products and Services Tax (GST) is going to be applicable on the payment of remuneration made by such directors reciprocally for services rendered to the corporate, as far as payment is formed to independent directors who aren’t employees of the corporate.

Goods and Services Tax (GST) is going to be applicable on payment of remuneration made in lieu of services rendered to the corporate by such directors.