Page 36 - GSTL_2nd July 2020 _Vol 38_Part 1

J10 GST LAW TIMES [ Vol. 38
Salary received as Director from a Private Limited Company
The applicant is in receipt of certain amount termed as salary as Director
of a private limited company. Two possibilities may arise with regard to the in-
stant issue of amount received by the applicant. The first possibility that the ap-
plicant is the employee of the said company (Executive Director), in which case
the services of the applicant as an employee to the employer are neither treated
as supply of goods nor as supply of services, in terms of Schedule III of CGST
Act. 2017.
The second possibility that the applicant is the nominated director (non-
Executive Director) of the company and provides the services to the said compa-
ny. In this case the remuneration paid by the company is exigible to GST in the
hands of the company under reverse charge mechanism under Section 9(3) of the
CGST Act, 2017, under Entry No. 6 of Notification No. 13/2017-C.T. (Rate), dated
28-6-2017.
In the instant case the applicant has not furnished any documentary evi-
dence such as copy of agreement between the applicant and the said private
company, copy of appointment order, details of ESI, PF deductions etc., so as to
decide whether the applicant is in receipt of salary as an employee or as an inde-
pendent director. Thus, in the absence of any documentary evidence, it is not
possible to decide whether the amount received by the applicant is towards his
services as an Executive Director or not.
In view of the above, the remuneration received by the applicant as Ex-
ecutive Director is not includible in the aggregate turnover, as it is the value of
the services supplied by the applicant being an employee. Further if the appli-
cant receives the remuneration as a non-Executive Director, such remuneration is
liable to tax under reverse charge mechanism under Section 9(3) of the CGST Act,
2017, in the hands of the company, under Entry No. 6 of Notification No.
13/2017-C.T. (Rate), dated 28-6-2017. Thus, the value of the said services of the
applicant being a non-Executive Director are includible in the aggregate turn-
over, as it is the value of the taxable services supplied by the applicant, though
the tax is discharged by the private limited company, under reverse charge
mechanism.

GST LAW TIMES  2nd July 2020  36