RCM on Non -executive director Commission

[Ashwin Bhalakiya]

My friends company is paying commission to their Non- Executive directors. They provided commission entry in books in FY 2020-21, the same got approved in Board meeting which is held in July-2021 & payment was made to director on 7th Aug 2021. Company Paid GST on RCM on 20th Sept 2021. Now Government GST officer raise the query that the company has paid the GST on RCM in Sept-2021, which is liable for interest for delay payment of GST. We would like to know the legal provision of the act. Whether RCM is to be paid on Provision or on Actual payment basis.

AI Summary

GST Officer Questions Delay in Reverse Charge Payment for Director Commissions; Debate Over Interest Liability Under Sections 2(31) and 13(3) A company paid commission to non-executive directors, recorded in FY 2020-21, approved in July 2021, and paid in August 2021. GST was paid on a reverse charge mechanism (RCM) in September 2021. A government GST officer questioned the delay in GST payment, suggesting liability for interest. One response stated the department's objection is valid, referencing the definition of 'consideration' under Section 2(31) of the CGST Act. Another response cited Section 13(3) of the CGST Act, arguing no delay occurred as liability under RCM arises upon payment, suggesting no interest is due.