Liablity for Tax

[Harsh Jindal]

Whose services are liable to Service Tax-directors or board of   directors?

[YAGAY andSUN]

Service provided byManaging and Whole-time Directors/ Executive Directors (those who are under employment with the Company) are governed by the exclusion clause contained in the definition of ‘service' under Section 65B (44) (b) which provides that service provided by employees to their employers in the course of or in relation to employment are exempt from service tax.

Service provided by Part-time/ Expert/ Independent/ Nominee directors, etc., (those who are not under employment with Company), are in the nature of providing their professional/expert services to the company. Hence, the said Services would be chargeable to Service tax under Reverse charge by the Company w.e.f 07.08.2012.

AI Summary

Service Tax Exemption Clarified: Employees as Directors Exempt; Non-Employee Directors Subject to Reverse Charge Under Section 65B (44) (b). A query was raised regarding the liability for service tax on directors' services. It was clarified that services provided by managing and whole-time directors, who are employees of the company, are exempt from service tax under the exclusion clause in Section 65B (44) (b). However, services provided by part-time, expert, independent, or nominee directors, who are not employees, are considered professional services and are subject to service tax under the reverse charge mechanism by the company, effective from August 7, 2012.