SERVICE TAX ON DIRECTORS REMUNERATION

[Mehul Pandya]

Greetings to all the Members,

As per Notification No. 45/2012 - Service Tax dated the 7^th August, 2012, Sr. No. 5A- in respect of services provided or agreed to be provided by a director of a company to the said company.(under RCM).

my query is - Will all the Directors fall under this or is it only for the Non – Executive Directors and the Independent Directors who are not the Employees of the Company, Kindly Explain, with any government order, if any.. Thanks.

AI Summary

Service Tax Applies to Non-Employee Directors Under RCM; Executive Directors Exempt. Case Clarifies Consultancy Services Exemption. A discussion on the applicability of service tax on directors' remuneration under the Reverse Charge Mechanism (RCM) highlights that services provided by directors who are not employees, such as independent or non-executive directors, are subject to service tax. Executive directors, like Managing or Whole Time Directors, are exempt as they are considered employees. A specific case involving Mr. A, a director and management consultant, raises questions about RCM applicability. It is clarified that Mr. A's consultancy services billed through his proprietorship firm are not subject to RCM, as he acts as an independent service provider.