The Central Board of Indirect Taxes and Customs (CBIC) has
issued a circular dated 10 June 2020 (Circular), clarifying the
applicability of goods and services tax (GST) on the remuneration
paid to whole time directors and independent directors. Services
rendered by an employee to his/her employer in the course of, or in
relation to, his/her employment are not exigible to GST, and
therefore, the moot issue was whether services provided by
directors are in the course of employment or not.
The uncertainty in the industry stemmed from the conflicting
advance rulings issued by the tax authorities in the cases of
M/s. Alcon Consulting Engineers (India) Pvt. Ltd.
[Advance Ruling No. RAJ/AAR/2019-20/33 dated
20 February 2020] and M/s Clay Craft India Pvt. Ltd.
[Advance Ruling No. KAR ADRG 83/2019 dated 25 September
2019] where the authorities ruled that GST is payable on
directors' remuneration, and the ruling in the case of Anil
Agarwal [Advance Ruling No. KAR ADRG 30/2020
