Service Tax liability regarding rent paid to director by LTD. company
Dear sir,
If Director A is owner of a Ltd. company B. then he receive rent for this company. Is Company B pay Service Tax for rent paid to director A or not under Notification 45/2012 where it is clarified that As per Sl. No. 5 A of notification No.45 /2012-ST dated 20.6.2012 (With effect from 07.08.2012) in respect of services provided or agreed to be provided by a director of a company or a body corporate to the said company or the body corporate Service tax is payable under reverse charge mechanism (RCM) @100% by the company or the body corporate.
Company Not Liable for Service Tax on Director's Rent Under RCM; Director Must Register if Income Exceeds 20 Lakhs A discussion on a forum addressed whether a company must pay service tax under the reverse charge mechanism (RCM) for rent paid to a director. The query referenced Notification 45/2012, which mandates service tax payment by the company for services provided by a director. Responses clarified that renting immovable property is considered a service by the director in an individual capacity, not as a company director. Therefore, the director must register as a service provider and pay the service tax if their rental income exceeds 20 lakhs, making RCM inapplicable in this scenario. (AI Summary)
Service Tax