Reverse Charge- Services of Director

[Sanjeev Sharma]

As per Notn No 45/2012-ST dated 7.8.12, Service tax under reverse charge is to be paid by service recipient in respect of  services  provided or agreed to be provided  by a director of a company to the said company.

 

Whether service tax is to be paid on salary to be paid to whole time director/ managing director

[JAMES PG]

This is applicable only for non-executive directors. Not applicable to Managing Director/Executive Director/Whole time Director  etc who are employees of the Company

[YAGAY and SUN]

In my view, services provided by directors as employee in the course of employer- employee relationship would not be covered by the said provision as employer-employee relationship activities are already excluded from the definition of service itself under section 65B (44) of the Finance Act.

[Debtosh Dey]

Sec 65B(44) excludes service of employee and Dy. no.324/Comm(ST)/2008 read with Circular no. 115/09/2009-ST had clarified that director-company stand in employee-employer relationship. As long as the Notification & Circular are not withdrawn, there is no service tax liability for remuneration paid to directors.  

AI Summary

Reverse charge on director services limited to non executive directors; remuneration to directors as employees is excluded from service tax.
The Notification's reverse charge applies to director services provided to the company only where those services are not within an employer employee relationship; remuneration paid to whole time, managing or executive directors who are company employees is excluded from service tax, while only non executive directors' services attract reverse charge.