GST On Remuneration Of Directors- CBIC Issues Clarification

The Central Board of Indirect Taxes and Customs (hereinafter referred to as 'CBIC'), GST (Goods and services Tax) wing, vide its Notification dated June 10, 2020 has clarified the position on applicability of GST on remuneration of directors. Several clarifications had been sought earlier regarding whether the remuneration paid by companies to their directors falls under the ambit of entry in Schedule III of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the CGST Act) under the heading of "services by an employee to the employer in the course of or in relation to his employment".¹

The CBIC has examined the above issue into two different categories:

1. Independent directors – applicability of GST on remuneration paid by companies to the independent directors as under section 149(6) of the Companies Act, 2013 or such directors which are not the employees of the said company; and