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GST on remuneration paid directors

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Central Board of Indirect Taxes and Customs (CBIC) have issued a circular clarifying that the director’s remuneration which are declared as ‘salaries’ in the books of a company and subjected to TDS under
Section 192 of the Income Tax Act are not taxable under GST regulations.
List of the clarification issued is as under –

  • Remuneration paid to independent director or those directors, by whatever name called, who are not employees of the said company is taxable in the hands of the company, on reverse charge basis.
  • Director’s remuneration which are declared as ‘salaries’ in the books of a company and subjected to TDS under Section 192 of the Income Tax Act are not taxable being consideration for services by an employee to employer in the course of employment in terms of Schedule III of CGST Act 2017.
  • Director’s remuneration which is declared as other than ‘salaries’ in the company’s accounts and subjected to TDS under Section 194J of the Income Tax Act as Fees for Professional or Technical
     services shall be treated as consideration for providing services which are outside the scope of Schedule III of CGST Act and is therefore taxable under GST regulations.