RCM on Director Sitting Fees

[PrateekKumar Khemka]

One of my client who is a Govt Company with no revenue holding GSTIN as deductor as on date is paying Director Sitting Fees to Independent Director wherein TDS is Deducted u/s 194J.

My query is in regard to applicability of RCM on such Director Sitting fees paid by the Company?If your answer to above query is yes, shall the company obtain GST Registration just for the purpose of discharging GST Liability?

Thanks in Advance

[KASTURI SETHI]

Answer to both queries is yes.

Board's FAQ dated 7.8.17

(16) Whether payment of sitting fees to directors covered in the provisions of reverse charge under director services.

Reply : Yes, it is covered. Please see S. No. 6 of Table to Notification No. 13/2017-Central Tax (Rate), dated 28-6-2017.

[Shilpi Jain]

Can I know the reason why the government company is not having any regular registration?

[Ganeshan Kalyani]

Yes, GST is payable by the company on director sitting fees. And for paying GST, the company has to take GST registration number.

AI Summary

Reverse charge on director sitting fees requires the recipient company to register and discharge GST liability under reverse charge. Director sitting fees paid by a government company are subject to GST under the reverse charge mechanism as reflected in the Board's FAQ and the Notification table; the recipient company must obtain GST registration if it lacks one in order to discharge the GST liability and fulfill related compliance obligations.