Goods and Services Tax – GST – By: – CA.VINOD CHAURASIA – Dated:- 11-9-2017 Last Replied Date:- 11-9-2017 – Introduction: This article discusses in detail about GST on Services of director i.e. sitting fees, commission etc. Taxability The government has power u/s 9(3) of CGST Act & u/s 5(3) of IGST Act, to notify the levy of GST on RCM basis on goods or services. Vide entry no. 6 of notification no. 13 of CGST dated 28th June 2017 & entry no. 7 of notification no. 10 of IGST dated 28th June 2017, Government had notified that any services supplied by a director of a company to the said company would be covered under reverse charge. Below are the related links. Notification No. 13/2017-Central Tax (Rate) New Delhi, the 28th June, 2017 Notification No. 10/2017-Integrated Tax (Rate) New Delhi, the 28th June, 2017 The relevant portion of the notifications is as below: Sl.No. Category of Supply of Services Supplier of service Recipient of Service (1) (2) (3) (4) 7 Services supplied
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ich the RCM is applicable: Supplies notified by Government u/s 9(3) Taxable Supplies by unregistered person to registered person In case of RCM, the liability to pay tax is on the recipient of supply of goods and services instead of the supplier of such goods or services in respect of notified categories of supply. As the director s services are covered under section 9(3), the liability to pay tax is on the recipient company despite of the fact the turnover from director s services exceeds ₹ 20L or 10L. Are directors are liable for GST registration ? As per notification no. 5/2017 – Central Tax dated 19th June, 2017, Government has specified that the persons who are only engaged in making supplies of taxable goods or services or both, the total tax on which is liable to be paid on reverse charge basis by the recipient of such goods or services or both under sub-section (3) of section 9 of the said Act as the category of persons exempted from obtaining registration under the afore
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eeds to be paid in the state where supply takes place, thereupon which it would land up in the hands of destination state government. The principles of determining the nature of supply (i.e. inter state supply or intra state supply) remain the same in case of RCM as well since the government has merely chosen the recipient of goods/services as the point of convenience from the point of view of better compliance with the law. Section 7 of the IGST Act states that where the location of the supplier and the place of supply are located in two different states or UTs, the transaction shall be an inter-state supply. Section 8 of the IGST Act states that where the location of the supplier and place of supply are located in the same state or UT, the transaction will qualify as an intra-state transaction. Place of supply Section 12(2)(a) of the IGST Act determines place of supply as the location of person where the services are received. A director services on the board of the company. The boar
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governance. They may meet, for a change, at a holiday destination. However, the meeting is for discussion of matters of corporate governance. The discussions held in board meeting is not restricted to a particular place but governing decisions are taken for benefit of entity as whole. Therefore, no matter where they meet, the meeting still discusses matters pertaining to the company, and therefore, the usual place of corporate governance should still be taken as the place of supply. Location of supplier in case of director services As per section 2(15) of IGST Act, location of the supplier of services means,- (a) where a supply is made from a place of business for which the registration has been obtained, the location of such place of business; (b) where a supply is made from a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere), the location of such fixed establishment; (c) where a supply is made from more than one establis
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