The CBIC has recently launched circular No. 201/13/2023-GST.
This circular clarifies the important questions that businesses like you had regarding:
Whether services supplied by the director of a company in his personal capacity such as renting of immovable property to the company or body corporate are subject to
Reverse Charge mechanism.
The GST Council discussed the aforementioned concern in its 50th GST Council meeting on July 11, 2023.
Tax Liability for Services by Directors under Reverse Charge Mechanism
According to Entry No. 6 of Notification No. 13/2017 CTR dated 28.06.2017, tax on services given by a director of a company or a body corporate to the said company or body corporate shall be paid by the company or the body corporate under the Reverse Charge Mechanism.
Understand about Reverse Charge Mechanism at:
Reverse Charge under GST
Or talk to a professional CA from our team and get your queries resolved:
CBIC’s Clarification on Services by Directors to Companies
The latest circular clarifies that:
- If a director of a company or a corporate body provides services to the same company or body in their personal capacity (for example, renting property to the company), those services will not be subject to a Reverse Charge Mechanism (RCM).
- But, if the director provides services to the company or body in their official capacity as a director, those services will be taxable under RCM, as per the notification No. 13/2017-CTR (Sl. No. 6) dated 28.06.2017.
Source: https://taxinformation.cbic.gov.in/view-pdf/1003175/ENG/Circulars
Moreover, If you want any other guidance relating to GST RCM: Clarification on Services by Directors to Companies, please feel free to talk to our business advisors at 8881-069-069.
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