Circular No: 140/10/2020 – GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing
New Delhi, dated the 10th June, 2020
The Principal Chief Commissioners / Chief Commissioners / Principal Commissioners /
Commissioners of Central Tax (All)
The Principal Director Generals / Director Generals (All)
Subject: Clarification in respect of levy of GST on Director’s remuneration – Reg.
Various references have been received from trade and industry seeking clarification
whether the GST is leviable on Director‟s remuneration paid by companies to their directors.
Doubts have been raised as to whether the remuneration paid by companies to their directors falls under the ambit of entry in Schedule III of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the CGST Act) i.e. “services by an employee to the employer in the course of or in relation to his employment” or whether the same are liable to be taxed in terms of notification No. 13/2017 – Central Tax (Rate) dated 28.06.2017 (entry no.6).
2. The issue of remuneration to directors has been examined under following two different categories:
(i) leviability of GST on remuneration paid by companies to the independent
directors defined in terms of section 149(6) of the Companies Act, 2013 or
those directors who are not the employees of the said company; and
(ii) leviability of GST on remuneration paid by companies to the whole-time
directors including managing director who are employees of the said
3. In order to ensure uniformity in the implementation of the provisions of the law across the field formations, the Board, in exercise of its powers conferred under section 168(1) of the CGST Act hereby clarifies the issue as below: