Service Tax on Directors Commission

[P S SATYA NARAYANA]

Please clarify, whether Directors need to pay service tax on commission they have received for the Financial year 2011/12 (prior to 1.7.2012),   in July 2012.

AI Summary

Directors' commissions for FY 2011/12 received in July 2012 not subject to service tax per Circular No. 115/09/2009. A query was raised regarding the applicability of service tax on directors' commissions received for the financial year 2011/12, specifically if such commissions received in July 2012 are taxable. It was clarified that according to Circular No. 115/09/2009 - ST dated 31st July 2009, service tax applies only to services provided from 1st July 2012 onwards. Therefore, commissions received in July 2012 for services rendered in the previous financial year are not subject to service tax. However, there are no explicit directions from the Department, and the circular may be used as a defense.