Independent directors' fees to attract GST

NEW DELHI: The government on Wednesday sought to end the confusion over GST on company directors, while also addressing concerns over held-up input tax credit refunds, an issue that was hurting industry amid tight cash flow. The finance ministry clarified that employees, who are also on the board of companies, will not face GST if they were paid "salaries", according to the company's books of accounts, on which tax was deducted and deposited with the income tax authorities.

"The part of employee director's remuneration, which is declared separately other than "salaries" in the company's accounts and subjected to TDS as fees shall be treated as consideration for providing services, and is therefore, taxable," it added.

The GST wing drew upon the I-T Act to clarify that remuneration paid to independent directors was in the nature of professional fee, which was taxed in line with provisions of the I-T Act.


Separately, amid several complaints of harassment, GST authorities eased the refund of accumulated input tax credit availed on imports, input service distributor invoices for tax on services availed of across branches and reverse charge (which allows the service or goods recipient to pay GST), citing an earlier circular.