Service Tax liability regarding rent paid to director by LTD. company

[manish kumar]

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.

[DR.MARIAPPAN GOVINDARAJAN]

Yes. You have given the correct picture. What is your query then? The amendment effected from 11.07.2014.

[manish kumar]

Is Company is liable to pay service for the rent paid to the director under RCM

[Nash Industries I Pvt Ltd]

The renting of immovable property service by the Director is different from the nature of services provided by the Director to the Company. The renting of immovable property is as an individual and not as a director of the company.

The Director needs to register himself as a service provider of renting of immovable property services and pay the Service Tax.

Regards

S.Ramaswamy

[Ganeshan Kalyani]

The director of a company has to register under GST provided the income from renting crosses the threshold limit of ₹ 20 lacs. The service is provided by a Director in his individual capacity and not as a director hence the reverse charge is not applicable in this case.

AI Summary

Reverse charge for director services: rent paid to a director is an individual supply and RCM not applicable.
The company's obligation under the reverse charge mechanism applies only to services provided by a person in his capacity as a director. Renting of immovable property by the director is an individual supply, not a director service, so the renting service does not attract reverse charge on the company; the director as service-provider must register and pay service tax where applicable.