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.

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.