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of <h1>Service tax not applicable on Director commissions; advisory services by Directors still taxable under service tax rules.</h1> The circular clarifies the applicability of service tax on commissions paid to Managing Directors or Directors, whether whole-time or independent, by companies. It states that these payments, even if termed as commissions, do not fall under 'Business Auxiliary Service' and are not subject to service tax. Additionally, since Directors perform management functions rather than consultancy or advisory roles, their remuneration does not qualify as 'Management Consultancy Service' and is not taxable. However, if Directors provide separate advisory services, those payments would be subject to service tax. The circular aims to resolve pending issues in accordance with these clarifications.
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