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

Reverse charge on non employee directors' professional services requires companies to pay service tax for such services. Services by Managing, Whole time or Executive Directors in an employment relationship are excluded from the taxable definition of service as employee services. Services by Part time, Expert, Independent or Nominee directors who are not employees are professional services chargeable to service tax, with the company required to pay under the reverse charge mechanism from the stated effective date.