Reverse charge on directors' remuneration: non executive directors' fees treated as taxable while whole time directors' pay may be employment income.
Whether directors' remuneration falls under the Reverse Charge Mechanism depends on the nature of the engagement: remuneration paid to whole time/executive directors that is declared as employment income (and disclosed in MR 1) is excluded from GST as employment consideration under Schedule III, whereas remuneration paid to non executive directors constitutes taxable director services and is liable to tax under RCM; divergent advance rulings have produced uncertainty, prompting a call for a clarificatory circular or amendment to ensure uniform treatment. (AI Summary)