Applicability of GST on Directors remuneration and liability to pay GST under RCM on Directors remuneration has always been a matter of dispute. Recently, Authority for Advance Ruling, Karnataka and the Authority for Advance Ruling, Rajasthan has determined that the company is liable to pay GST under RCM on remuneration paid to directors in capacity of employees.
Verdict was given in the case of M/S. ALCON CONSULTING ENGINEERS (INDIA) PVT. LTD. (No. KAR ADRG 83/2019 dated 25th September, 2019) by Authority for Advance Ruling, Karnataka and M/s IN RE: M/S. CLAY CRAFT INDIA PVT. LTD. (RAJ/AAR/2019-20/33 dated 20th February, 2020) by Authority for Advance Ruling, Rajasthan.
The Hon’ble AAR Rajasthan has determined that remuneration / considerations paid to directors by the company is liable to GST under Reverse Charge Mechanism under entry No. 6 of Notification No. 13/2017, Central Tax (rate) dated 28-06-2017.
上述裁定分别由卡纳塔克邦预先裁定机构针对 M/S. ALCON CONSULTING ENGINEERS (INDIA) PVT. LTD. 一案（编号 KAR ADRG 83/2019，日期为2019年9月25日）以及拉贾斯坦邦预先裁定机构针对 M/s IN RE: M/S. CLAY CRAFT INDIA PVT. LTD. 一案（编号 RAJ/AAR/2019-20/33，日期为2020年2月20日）作出。
Below are detailed analysis of the order passed by the honourable Authority of Advance Ruling and consequently circular issued by CBIC in the matter.
拉贾斯坦邦预先裁定机构裁定，公司支付给董事的薪酬/对价，须根据2017年6月28日发布的第13/2017号中央税（税率）通知第6项，缴纳反向征收机制（RCM）项下的GST。
Many facts and arguments have been placed by both the authorities in the given case . Let's have a look below to re-evaluate the actual situation of this context.
鉴于各方提出的多项陈述以及预先裁定所引发的日益严重的困惑，中央间接税和海关委员会（“CBIC”或“税务部门”）于2020年6月10日发布了第140/10/2020-GST号通函，旨在澄清董事薪酬的GST适用性问题。
- M/s Clay Crafts India Private Limited (“The Applicant”) is engaged in manufacture of bone China Crockery, Transfer Sheet Decalcomania, other Utensils Item and Moulds & Die.
- 以下是对预先裁定机构所作裁决及CBIC随后发布的相关通函的详细分析。
- Directors are performing all duties and responsibility set out in law. Simultaneously, directors are also working at different levels of management as employees for which they are getting regular salaries and other allowances as per the policies.
- 1. 关于 M/s Clay Crafts India Pvt Ltd 的预先裁定
- In September, 2019, Authority for Advance Ruling in the matter of M/s Alcon Consulting Engineers (India) Pvt. Ltd that Directors’ remuneration is Liable to GST under RCM. Hon’ble Authority of Advance Ruling set down following points:
- Remuneration paid to the directors of the company is not covered under Schedule III of the CGST Act, 2017 as directors are not the employees of the company.
- Director is the supplier of the service and the company is the recipient of the service.
- As recipient (i.e. Company) is located in taxable territory and director’s remuneration is paid for services supplied by him to the company. Therefore, this service falls under heading No. 6 of Notification No. 13/2017 dated 28th June, 2017. Therefore, Company is liable to pay GST on the same under RCM.
- 在该案中，双方机构均提出了诸多事实与论据。让我们通过下文重新审视该背景下的实际情况。
- Salary paid to directors is booked under “Income From Salary” by directors in their personal Income Tax Return.
1.1 案情简介
- Whether GST is payable under Reverse Charge Mechanism (RCM) on the director's salary and other payments?
- M/s Clay Crafts India Private Limited（“申请人”）主要从事骨瓷餐具、转印贴花、其他器皿以及模具的制造。
2. Relevant Legal Extract of CGST law to determine RCM on Directors remuneration
申请人董事会共有6名董事。
“(2) Notwithstanding anything contained in sub-section
(a) activities or transactions specified in Schedule III; or
(b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be treated neither as a supply of goods nor a supply of services.”
2.2 Entry No. I to Schedule III of CGST Act, 2017
“1. Services by an employee to the employer in the course of or in relation to his employment.”
2.3 Entry No. 6 of Notification No. 13/2017-Central Tax (Rate) dated 28th June, 2017:
“on categories of supply of services mentioned in column (2) of the Table below, supplied by a person as specified in column (3) of the said Table, the whole of central tax leviable under section 9 of the said Central Goods and Services Tax Act, shall be paid on reverse charge basis by the recipient of the such services”. The notification is issued under Section 9(3) of the CGST Act, 2017.
Entry 6 of the said Notification reads as under
| S. No. |
Category of Supply of Services |
Supplier of Services |
Recipient Services of Services |
| 1 |
2 |
3 |
4 |
| 6 |
Services supplied by a Director of a company or a body corporate to the said company or the body corporate |
A director of a company or a body corporate |
The company or a body corporate located in the taxable territory |
3. Why Salaries / remuneration to Directors should not be charged to GST under RCM
- Apart from being directors of the Board of Directors, Directors of petitioner are also working as whole time directors as an employee and treated as par with employees.
- Petitioner is deducting EPF from their salaries and all other benefits are granted to them as given to other employees.
- Directors working as whole time directors are de-facto employees of the company.
- Therefore, as per Entry No. 1 to Schedule III of CGST Act, 2017, payment made to them for salary is not liable to GST under RCM.
- Term Employee is not defined under CGST Act, 2017, therefore, contention has to be taken from following other sources:
Companies Act, 2013
- As per Section 2(94) of Companies Act, 2017, Directors include directors in employment of the company.
- Therefore, any director working as a whole time director is an employee of the company.
Employee's Provident Fund and Miscellaneous Provisions Act, 1952 & Employees Provident Fund Scheme, 1952
- Whole time directors are appointed by the Board of directors of the company and are given various responsibilities of the company. Therefore, they are qualified as employees of the company under both the acts.
Regional Director, E.S.I. .. vs Sarathi Lines (P) Ltd. on 29 January, 1997 (1998) ILLJ 28 Ker the Hon'ble High Court of Karnataka
- A director or managing director can have dual capacity of both agent as well as employee of the company.
- It all depends upon his work and the terms of his employment.
- An employee works under supervision or direct control of his employer.
- The Hon'ble Supreme Court held that the power of the Managing director had to be exercised within the terms and conditions prescribed in terms of employment and his work is subject to the control and supervision of the directors.
- Therefore, the director is employed as a servant of the company.
- 最高法院在 Ram Pershad 诉所得税专员案（1972年8月24日，1973 AIR 637, 1973 SCR (3) 985）中也持类似观点。
- 申请人的组织章程大纲和组织章程细则也允许任命董事总经理并以薪资形式支付报酬。
- 因此，申请人主张，综合解读上述所有条款可以明确，董事会与董事总经理之间存在雇主与雇员关系。
- 因此，支付给董事的所有薪资及其他津贴（差旅费、医疗费等）均属于薪资范畴，因此属于《中央商品及服务税法》（CGST Act）附表 III 第 1 项的涵盖范围。
- 因此，申请人无需就支付给董事的薪资通过反向征收机制缴纳商品及服务税（GST）。
4. 为什么董事的薪资/报酬应通过反向征收机制（RCM）缴纳 GST
- 申请人支付给董事的薪资属于 2017 年《中央商品及服务税法》附表 III 第 1 项的涵盖范围，因为董事并非公司的雇员。
- 服务提供方为董事，服务接收方为公司（根据 2017 年《中央商品及服务税法》第 2(93) 条），且申请人已就此类服务向董事支付了对价。
- 2017 年 6 月 28 日发布的第 13/2017-中央税（税率）号通知第 6 项规定，如果接收方是位于应税区域的公司/法人团体，服务提供方是公司董事，且已就董事提供的服务支付了对价，则需通过反向征收机制征收 GST。
- 在本案中，申请人位于应税区域，且已就董事向公司提供的服务向其支付了报酬。
- 因此，申请人有义务就支付给董事的报酬通过反向征收机制缴纳 GST。
- 公司就董事提供的服务向其支付了薪资和佣金形式的对价。公司是此类服务的接收方。
- 申请人已根据 2017 年 6 月 28 日发布的第 13/2017-中央税（税率）号通知第 6 项，就支付给董事的佣金通过反向征收机制缴纳了 GST。
- 董事向公司提供的服务明确属于第 6 项的涵盖范围。公司支付给董事的对价不属于 2017 年《中央商品及服务税法》附表 III 第 1 项的涵盖范围，因为董事并非公司的雇员。
- 2017 年 6 月 28 日发布的第 13/2017-中央税（税率）号通知第 6 项对董事提供的服务与其他服务进行了区分，并明确将此类服务纳入反向征收机制。
- 此外，申请人引用的判例与本案无关，本案需根据现行《中央商品及服务税法》的规定进行裁决。
- 因此，由于申请人公司位于应税区域，且已就董事向公司提供的服务支付了对价，因此该对价需根据第 6 项通过反向征收机制缴纳 GST。
5. 预先裁定局（AAR）在以下案件中的裁决：
问题 1：对于根据合同领取薪资的公司董事，其薪资是否需要通过反向征收机制（RCM）缴纳 GST。
裁决：申请人公司支付给董事的对价将触发反向征收机制下的 GST，因为它属于 2017 年 6 月 28 日根据 2017 年《中央商品及服务税法》第 9(3) 条发布的第 13/2017 号中央税（税率）通知第 6 项的涵盖范围。
问题 2：如果该董事同时在另一家公司担任兼职董事，情况是否会发生变化。
裁决：情况与上述 (a) 项相同，仍需通过反向征收机制缴纳 GST。
6. 关于澄清董事报酬 GST 问题的通告（2020 年 6 月 10 日发布的第 140/10/2020 - GST 号通告）
税务部门收到多方陈述，要求明确董事薪酬是属于《2017年中央商品及服务税法》（CGST Act, 2017）附表三第1项的范畴，还是应根据2017年6月28日发布的第13/2017号中央税（税率）通知第6项，通过反向征收机制（RCM）缴纳税款。
税务部门已针对以下两类董事对该问题进行了分析：
- 独立董事（指《2013年公司法》第149(6)条所指的董事），他们并非公司员工。
- 全职董事及常务董事，他们是公司员工。
6.1 独立董事的薪酬将根据反向征收机制（RCM）缴纳商品及服务税（GST）（不作为公司员工薪酬处理）
- 根据《2013年公司法》第149(6)条，任命独立董事的前提条件是，该董事在过去三个财政年度内均不得为公司员工。
- 《2013年公司法》第2(94)条对“全职董事”提供了包含性定义。因此，非公司员工的人员亦可被任命为全职董事。
- 因此，支付给此类非公司员工董事的薪酬，不属于《2017年中央商品及服务税法》附表三第1项的范畴。
- 因此，根据第13/2017号中央税（税率）通知第6项，服务接收方（即公司）有义务就此类薪酬通过反向征收机制（RCM）缴纳商品及服务税（GST）。
6.2 全职董事及常务董事的薪酬无需通过反向征收机制（RCM）缴纳商品及服务税（GST）（属于公司员工）
- 税务部门已明确，要确定董事薪酬是否适用商品及服务税（GST），关键在于审查该服务是基于“服务合同”（雇主与雇员关系）还是“服务委托合同”执行的。
- 董事可能以双重身份工作，即同时作为公司员工和公司董事。
- 《1961年所得税法》也确立了类似的立场，即支付给董事的薪水需根据第192条（薪资预扣税）缴纳预扣税（TDS）。然而，若薪酬性质为专业服务费而非薪水，则需根据第194-J条（专业服务费预扣税）缴纳预扣税。
- 因此，支付给董事的款项，若在账簿中列为“薪水”并已根据《所得税法》第192条扣缴预扣税（TDS），则属于《中央商品及服务税法》附表三第1项的范畴。因此，此类款项无需缴纳商品及服务税（GST）。
- 然而，若款项在公司账簿中记录为“薪水”以外的项目，且需根据《所得税法》第194J条扣缴预扣税（TDS），则此类款项属于2017年6月28日发布的第13/2017号中央税（税率）通知第6项的范畴，公司有义务就此类款项通过反向征收机制（RCM）缴纳商品及服务税（GST）。
7. Conclusion
- 若款项在公司账簿中记为“薪水”并已根据《所得税法》第192条扣缴预扣税（TDS），则该款项属于《2017年中央商品及服务税法》附表三的范畴，无需缴纳商品及服务税（GST）。
- 若支付款项非“薪水”且已根据《1961年所得税法》第194J条扣缴预扣税（TDS），则公司有义务就此类款项通过反向征收机制（RCM）缴纳商品及服务税（GST）。
