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

AI Summary

Reverse Charge Mechanism for Service Tax Applies Only to Non-Executive Directors, Not Managing or Whole-Time Directors. A discussion on a forum addressed the applicability of reverse charge service tax on directors' services to a company, as per Notification No. 45/2012-ST. The query questioned whether service tax applies to salaries of whole-time or managing directors. Respondents clarified that the reverse charge mechanism applies only to non-executive directors. They emphasized that services provided by directors in an employee-employer relationship, such as those by managing or whole-time directors, are excluded from the service tax under Section 65B(44) of the Finance Act, as reinforced by previous circulars and directives.