TaxAvant

The Central Board of Indirect Taxes & Customs(CBIC) issued Clarification vide  Circular No.140/10/2020-GST  on June 10,2020 putting an end to the huge commotion generated by the contrary rulings of various Advance Ruling Authorities(AAR) on the applicability of GST on Remuneration paid to Directors of a Company. Various Doubts were posed as to whether the GST is leviable on Director's Remuneration paid by companies to their Directors falls under the ambit of entry in Schedule III of Central Goods and Services Tax Act,2017 (CGST Act) i.e.  "services by an employee to the employer in the course of or in relation to his employment"  or whether the same is liable to be taxed in terms of notification no.13/2017-Central Tax(Rate) dated 28th June 2017(entry no.6). The issue of remuneration to directors has been examined under the following two different categories: i) Leviability of GST on remuneration paid by companies to the independent directors defined in section 149(6)