Director Personnel Services not covered under RCM Mechanism

Director Personnel Services are not covered under RCM Mechanism

Services by directors in personal capacity to company not taxable under GST Reverse Charge Mechanism: Finance Ministry

The Central Board of Indirect Taxes & Customs on 01 Aug. 2023 make an announcement subject to the recommendation of GSTN; Central Board of Indirect Taxes & Customs issue Circular No 201/2023: Director Personal Services are not covered under RCM (Reverse Charge Mechanism) Scheme
Central Board of Indirect Taxes & Customs leave the Director personal services under Reverse Charge Mechanism (RCM), That supply by a director to the company in his private or personal capacity. E.g. Renting property to the company.
As per the CBIC Notification No. 13/2017-CTR (SI.No.6) Date 28 June 2017. Which explain that on services that’s are comes out, services which Director provided in his Directorial capacity, shall be charge under RCM in the hands of the company.

Clarification came after the goods and services tax council in its meeting on July 11 decided that GST will be imposed only on services which are provided by director in their official capacity to the company. But according to experts, there are still a lot of uncertain areas. Swatantra Kumar Singh, partner at Rajput Jain and Associates, criticised the clarification as being too limiting and failing to define the term “personal capacity” or “indicate an illustrative list of personal services provided by a director.”
“GST Taxation implication of other director services for example consultancy or advisory services, training services and planning services, & bank guarantee Services will continue to be a grey area for the industry unless Central Board of Indirect Taxes & Customs gives unambiguous rules for categorization of ‘director services’,
Before commencing this new amendment “Directors services even private or personal capacity, both are shall taxable under RCM in the hand of company”. Its noted as an important change in Central Goods and Services Tax Act U/s 9(3) of Reverse Charge Mechanism.

Tags: RCMREVERSE CHARGE MECHANISMreverse charge mechanism (RCM)

3 years ago

Rajput Jain & Associates

Rajput Jain & Associates is a Chartered Accountants firm, with it's headquarter situated at New Delhi (the capital of India). The firm has been set up by a group of young, enthusiastic, highly skilled and motivated professionals who have taken experience from top consulting firms and are extensively experienced in their chosen fields has providing a wide array of Accounting, Auditing, Taxation, Assurance and Business advisory services to various clients and their stakeholders. Rajput jain & Associates, a professional firm, offers its clients a full range of services, To serve better and to bring bucket of services under one roof, the firm has merged with it various Chartered Accountancy firms pioneer in diversified fields. We have associates all over India in big cities. All our offices are well equipped with latest technological support with updated reference materials. We have a large team of professionals other than our Core Team members to meet the requirements of our prospective clients including the existing ones. However, considering our commitment towards high quality services to our clients, our team keeps on growing with more and more associates having strong professional background with good exposure in the related areas of responsibility.