Services by Director to a Body Corporate are liable to tax under RCM.
As per the revenue authorities, services by Director to a Body Corporate are liable to GST under RCM whereas taxpayers where discharging GST only on those services which were rendered by Director as Director.
Circular 201/2023 has been issued to clarify that GST under RCM will be applicable only on services rendered by Director in his capacity as Director. Any services rendered by the Director in his personal capacity will not be liable to tax under RCM.
Basis the above clarification, the GST Liability on services rendered by a person who is also a Director of a Company, has been summarized in the below table.
Few points for consideration
1. While computing the turnover of Director (even for the purpose of computation of threshold exemption from registration) – RCM turnover needs to be included though the tax is being paid by the recipient
2. No clarification has been provided on treatment of Director Guarantee – This is not in the nature of service and hence even if given in the capacity as director, should not be liable to tax
Circular 201/2023 has been issued to clarify that GST under RCM will be applicable only on services rendered by Director in his capacity as Director. Any services rendered by the Director in his personal capacity will not be liable to tax under RCM.
Basis the above clarification, the GST Liability on services rendered by a person who is also a Director of a Company, has been summarized in the below table.
Few points for consideration
1. While computing the turnover of Director (even for the purpose of computation of threshold exemption from registration) – RCM turnover needs to be included though the tax is being paid by the recipient
2. No clarification has been provided on treatment of Director Guarantee – This is not in the nature of service and hence even if given in the capacity as director, should not be liable to tax