Whether RCM will be Applicable on director Salary or Not ?

M/S CLAY CRAFT (INDIA) PVT. LTD (AAAR – RAJASTHAN)

Applicant :  Private Limited Company engaged in Manufacturing of Bone Chine (crockery/transfer sheet Decalcomania) having 6 directors.

Question:

1. Whether RCM is applicable on salary (Director) ?
2. What is the answer if director is also part time director in other company ?

Director—Getting Commission & salary for their services.

Submission : Applicant contention Salary is covered under entry No. 1 of Schedule III of CGST Act 2017 hence neither a supply of good & nor a supply of service. hence not liable to tax.

Finding: Authority says that services supplied by director is covered under Notification No. 13/2017 central tax Dated 28/06/2017. Also, director is supplying services in the company. Director are not employee of company as per Schedule III of CGST Act.

Conclusion : If Director in one company only in that case GST RCM will be chargeable also part time director in another company RCM should be Applicable. The same has been covered under section 9(3) of CGST Act, 2017.