REVERCE CHARGE ON SERGICES PROVIDED BY DIRECTOR

[prabhu Chauhan]

SIR,

WILL THE RENT PAID TO A DIRECTOR BY A COMPANY FOR THE BUILDING OF THE DIRECTOR TAKEN ON LEASE BY THE COMPANY FALL UNDER 'THE SERVICES PROVIDED BY THE DIRECTOR' FOR THE PURPOSE OF REVERSE CHARGE OF SERVICE TAX

REGARDS

[Rajagopalan Ranganathan]

Sir,

The answer to your query is yes vide Sl. No. 5A of Notification No. 30/2012-ST dated 20.6.2012 (with effect from 1.7.2012).

[Ganeshan Kalyani]

Sir with due respect I would like to know whether the Directors is a whole time Director or Managing Director ? Whether they are paid Salary ?

[prabhu Chauhan]

Dear friend

I my vew the services of renting building by a directory should not fll under the reverse charge mechanism aa the service of renting is not a service provided by direcotr in the capacity of director rather it is in the capacity of land Lord.

If a director can be employee and his salary is not covered for reverse charge he can also be a land Lord and hence renting should not be covered under RCM.

[Ganeshan Kalyani]

Sir, your query is now different from what we understood at first. Sri Rajagopalan Sir has replied in terms of reverse charge mechanism.

Anyway now you yourself have answered well. Thanks.

[Manoj Agarwal]

As already mentioned, this is transaction between Landlord (who happens to be Director) and Tenant (Company), so no question of applicability of RCM. Means the landlord is liable to charge & pay service tax thereon subject to threshold exemption vide N/N - 33/2012-ST

AI Summary

Reverse charge on services provided by a director contested; renting argued outside RCM, landlord liable for tax. Whether rent paid by a company to a director for leased premises falls under the reverse charge mechanism is disputed: one view invokes reverse charge coverage of services by a director, while alternative analysis treats the transaction as ordinary renting by the director in the capacity of landlord, making the director the supplier liable for service tax subject to threshold exemptions.