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J10 GST LAW TIMES [ Vol. 39
listed in Schedule-III, it is outside the purview of GST and hence the
question of reverse charge does not arise at all.
Therefore, we can say that if relation between director and company
is of employer-employee, it will fall under Schedule-III and there-
fore will be outside the ambit of GST. In all the other cases, it will be
taxable and reverse charge shall apply.
Whether director is an employee or not - Provisions from other statutes?
 Companies Act, 2013 :-
The definition of employee given in Companies Act, 2013 includes
“a director of the company, whether a whole time director or not but ex-
cluding an independent director”. Therefore, the definition of employ-
ee given in Companies Act is wide enough to cover all types of di-
rectors whether it is whole time or part time. However, it will not
cover an independent director. The term independent director co-
vers every director except managing director or a whole time direc-
tor or a nominee director. Therefore, except independent director,
all the other types of directors like managing director, whole time
director or a nominee director are treated as employee of the com-
pany.
 Income-tax Act, 1961 :-
Salaries paid to directors are subject to TDS under Section 192 of the
Income-tax Act, 1961. Professional fees or other remuneration paid
to directors not being salary is liable to TDS under Section 194J of
the Income-tax Act, 1961.
Advance Rulings on reverse charge on director’s remuneration
 M/s. Alcon Consulting Engineers (India) Pvt. Ltd. (AR No. KAR
ADRG 83/2019) [2019 (30) G.S.T.L. 678 (A.A.R. - GST)] :-
In this ruling, Advance Ruling authority of Karnataka held that
consideration paid to directors is in relation to services provided by
director of company and hence it is covered in Serial No. 6 of Noti-
fication No. 13/2017-C.T. (Rate), dated 28-6-2017; therefore, it is lia-
ble to tax under reverse charge.
 M/s. Clay Craft India Private Limited (RAJ/AAR/2019‐20/33) [2020
(35) G.S.T.L. 580 (A.A.R. - GST) :-
In this case, the applicant M/s. Clay Craft India Pvt. Ltd. was pay-
ing salary to its directors. Directors were also showing the remuner-
ation received by them as “Income from Salary” in their income tax
returns. The company sought advance ruling on the issue whether it
is liable to pay tax under reverse charge in case the directors are
treated as employee of the company as per contract. In this ruling,
the Advance Ruling Authority of Rajasthan held that tax is payable
under reverse charge as the case is covered under Entry No. 6 of
Notification No. 13/2017-C.T. (Rate).
Analysis of Advance Rulings
In the case of M/s. Alcon Consulting, the advance ruling authority did not
discuss the contents of Schedule-III to CGST Act, 2017. Also, it did not check the
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