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CBIC issues clarification in respect of remuneration to Directors

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CBIC has issued the clarification in respect of Director remuneration vide Circular No. 140/10/2020 where it has been clarified :-

a. In the matter of remuneration to the Non-executive director where there is no employer-employee relationship and the fee has been give in respect of payment for professional services on which TDS has to be deducted u/s. 194J. Then, the said transaction is taxable under GST and the company has to pay the GST under the Reverse Charge Mechanism.

b. In the matter of remuneration to the Executive director where there is employer employee relationship and the salary has been paid to the Director on which TDS has been deducted u/s. 192. Then, the said transaction is outside the GST as it is covered under Schedule III of the CGST Act 2017.

To view and download the circular, click here Circular_Refund_140_10_2020

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