Mandatory Bank Account Details Submission Under GST

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Mandatory furnishing bank account details by registered taxpayers under Rule 10A of the Central Goods and Services Tax Act, 2017. Let's Understand What Is Rule 10A Under CGST Act, 2017. The objective of Rule 10A is to prevent fraudulent activities such as the creation of fake GST registrations and the generation of bogus invoices. By verifying the bank account details of new GST registrants, the government can ensure that only genuine businesses are registered under the GST regime. So all the registered taxpayers are required to furnish their bank account details within the prescribed period of time. Mandatory Bank Account Details Submission as Per Law: All Registered Taxpayers are required under the provisions of CGST Act, 2017 and the corresponding Rules framed thereunder to furnish  their bank Account  Details within 30 days of the grant of registration or before the due date of filing GSTR-1/IFF, whichever is earlier. Taxpayers are therefore advised to promptly furnish the...
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Circular No: 140/10/2020 - GST

Circular No: 140/10/2020 - GST


CBEC-20/10/05/2020 -GST 
Government of India 
Ministry of Finance 
Department of Revenue 
Central Board of Indirect Taxes and Customs

New Delhi, dated the 10th June, 2020

To
The Principal Chief Commissioners / Chief Commissioners / Principal Commissioners / Commissioners of Central Tax (All) 

The Principal Director Generals / Director Generals (All)

Madam/Sir,

Subject: Clarification in respect of levy of GST on Director’s remuneration - Reg.

1. 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 company.

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) ofthe CGST Act hereby clarifies the issue as below:

Leviability of GST on remuneration paid by companies to the independent directors or those directors who are not the employee of the said company. 
4.1 The primary issue to be decided is whether or not a „Director‟ is an employee of the company. In this regard, from the perusal of the relevant provisions of the Companies Act, 2013, it can be inferred that: 

a. the definition of a whole time-director under section 2(94) of the CompaniesAct, 2013 is an inclusive definition, and thus he may be a person who is not an employee of the company. 

b. the definition of „independent directors‟ under section 149(6) of the Companies Act, 2013, read with Rule 12 of Companies (Share Capital and Debentures) Rules, 2014 makes it amply clear that such director should not have been an employee or proprietor or a partner of the said company, in any of the three financial years immediately preceding the financial year in which he is proposed to be appointed in the said company.  

4.2 Therefore, in respect of such directors who are not the employees of the said company, the services provided by them to the Company, in lieu of remuneration as the consideration for the said services, are clearly outside the scope of Schedule III of the CGST Act and are therefore taxable. In terms of entry at Sl. No. 6 of the Table annexed to notification No. 13/2017 – Central Tax (Rate) dated 28.06.2017, the recipient of the said services i.e. the Company, is liable to discharge the applicable GST on it on reverse charge basis

4.3 Accordingly, it is hereby clarified that the remuneration paid to such independent directors, or those directors, by whatever name called, who are not employees of the said company, is taxable in hands of the company, on reverse charge basis.

Leviability of GST on remuneration paid by companies to the directors, who are also an employee of the said company
5.1 Once, it has been ascertained whether a director, irrespective of name and designation, is an employee, it would be pertinent to examine whether all the activities performed by the director are in the course of employer-employee relation (i.e. a “contract of service”) or is there any element of “contract for service”. The issue has been deliberated by various courts and it has been held that a director who has also taken an employment in the company may be functioning in dual capacities, namely, one as a director of the company and the other on the basis of the contractual relationship of master and servant with the company, i.e. under a contract of service (employment) entered into with the company.

5.2 It is also pertinent to note that similar identification (to that in Para 5.1 above) and treatment of the Director‟s remuneration is also present in the Income Tax Act, 1961 wherein the salaries paid to directors are subject to Tax Deducted at Source ('TDS') under Section 192 of the Income Tax Act, 1961 ('IT Act'). However, in cases where the remuneration is in the nature of professional fees and not salary, the same is liable for deduction under Section 194J of the IT Act.

5.3. Accordingly, it is clarified that the part of Director‟s remuneration which are declared as „Salaries‟ in the books of a company and subjected to TDS under Section 192 of the IT Act, are not taxable being consideration for services by an employee to the employer in the course of or in relation to his employment in terms of Schedule III of the CGST Act, 2017.

5.4 It is further clarified that the part of employee Director‟s remuneration which is declared separately other than „salaries‟ in the Company‟s accounts and subjected to TDS under Section 194J of the IT Act as Fees for professional or Technical Services shall be treated as consideration for providing services which are outside the scope of Schedule III of the CGST Act, and is therefore, taxable. Further, in terms of notification No. 13/2017 – Central Tax (Rate) dated 28.06.2017, the recipient of the said services i.e. the Company, is liable to discharge the applicable GST on it on reverse charge basis. 

Hindi:

1. व्यापर और उद्योग से विभिन्न सन्दर्भ प्राप्त किये गए है, जो यह स्पष्ट करने की मांग कर रहे हैं की क्या कम्पनियो द्वारा उनके निदेशकों को भुगतान किये गए पारिश्रमिक पर GST देना हैं! इस बात पर संदेह जताया गया की कंपनियों द्वारा उनके निदेशको को दिया गया पारिश्रमिक CGST Act, 2017 की अनुसूची III के दायरे में Fall करता हैं! एक कर्मचारी द्वारा नियोक्ता को उसके रोजगार के संबंध में या उसके संबंध में सेवाएं ”या क्या अधिसूचना संख्या 13/2017 के संदर्भ में कर लगाने के लिए उत्तरदायी हैं - केंद्रीय कर (दर) दिनांक 28.06.2017 (प्रवेश संख्या)। 6)।


2. निदेशकों को पारिश्रमिक के मुद्दे की दो अलग-अलग श्रेणियों के तहत जांच की गई है: (i) कंपनियों द्वारा अधिनियम, 2013 की धारा 149 (6) और उन निदेशकों के रूप में परिभाषित स्वतंत्र निदेशकों को कंपनियों द्वारा भुगतान किए गए पारिश्रमिक पर जीएसटी की देयता। उक्त कंपनी के कर्मचारी नहीं; और (ii) कंपनी द्वारा प्रबंध निदेशक सहित पूरे समय के निदेशकों को देय पारिश्रमिक पर जीएसटी की देयता जो उक्त कंपनी के कर्मचारी हैं।

 3. कानून के प्रावधानों के कार्यावयन में एकरूपता सुनिश्चित करने के लिए बोर्ड, CGST Act धारा 168 (1) के तहत प्रदत अपनी शक्तियो के प्रयोग से इस मुद्दे को नीचे स्पष्ट करता हैं:

कंपनियों द्वारा स्वतंत्र निदेशकों या उन निदेशकों को भुगतान किए गए पारिश्रमिक पर GST की देयता जो कंपनी के कर्मचारी नहीं हैं।

4.1 प्राथमिक मुद्दे पर निर्णय लिया जाना है कि ‟निदेशक कंपनी का कर्मचारी है या नहीं। इस संबंध में, कंपनी अधिनियम, 2013 के प्रासंगिक प्रावधानों के उल्लंघन से, यह अनुमान लगाया जा सकता है कि:
a. कंपनी अधिनियम, 2013 की धारा 2 (94) के तहत एक पूरे समय-निदेशक की परिभाषा एक समावेशी परिभाषा है, और इस प्रकार वह एक ऐसा व्यक्ति हो सकता है जो कंपनी का कर्मचारी नहीं है।
b. कंपनी अधिनियम, 2013 की धारा 149 (6) के तहत स्वतंत्र निदेशकों की परिभाषा Capital, कंपनियों के नियम 12 (शेयर पूंजी और ऋण) नियम, 2014 यह स्पष्ट करता है कि ऐसे निदेशक को कर्मचारी या मालिक नहीं होना चाहिए था या उक्त कंपनी का कोई भी भागीदार, वित्तीय वर्ष से पहले के किसी तीन वित्तीय वर्षों में, जिसमें वह उक्त कंपनी में नियुक्त होना प्रस्तावित है।.

 4.2 इसलिए, ऐसे निदेशकों के संबंध में जो उक्त कंपनी के कर्मचारी नहीं हैं, उनके द्वारा कंपनी को प्रदान की गई सेवाएँ, पारिश्रमिक के बदले में, उक्त सेवाओं के विचार के अनुसार, CGST अधिनियम की अनुसूची III के दायरे से बाहर हैं। और इसलिए कर योग्य हैं। तालिका संख्या 6 अधिसूचना संख्या 13/2017 में संलग्न - केंद्रीय कर (दर) दिनांक 28.06.2017, उक्त सेवाओं के प्राप्तकर्ता यानी कंपनी, रिवर्स चार्ज के आधार पर उस पर लागू जीएसटी का निर्वहन करने के लिए उत्तरदायी है।

 4.3 तदनुसार, यह स्पष्ट किया गया है कि ऐसे स्वतंत्र निदेशकों, या उन निदेशकों को दिया जाने वाला पारिश्रमिक, जो भी नाम से पुकारा जाता है, जो उक्त कंपनी के कर्मचारी नहीं हैं, रिवर्स चार्ज आधार पर कंपनी के हाथों में कर योग्य है।

 कंपनियों द्वारा निदेशकों को भुगतान किए गए पारिश्रमिक पर जीएसटी की देयता, जो पहले से कंपनी के कर्मचारी भी हैं.

5.1 एक बार, यह पता चला है कि क्या एक निदेशक, नाम और एक पद पर होंने के बावजूद, एक कर्मचारी है, यह जांचना उचित होगा कि क्या निदेशक द्वारा की गई सभी गतिविधियां नियोक्ता-कर्मचारी संबंध (यानी "सेवा के अनुबंध) के दौरान हैं? ") या" सेवा के लिए अनुबंध "का कोई तत्व है। इस मुद्दे पर विभिन्न न्यायालयों द्वारा विचार-विमर्श किया गया है और यह माना गया है कि एक निदेशक जिसने कंपनी में रोजगार लिया है, वह दोहरी क्षमताओं में कार्य कर सकता है, अर्थात्, एक कंपनी के निदेशक के रूप में और दूसरा अनुबंध के आधार पर कंपनी के साथ सेवा के एक अनुबंध (रोजगार) के तहत, कंपनी के साथ मास्टर और नौकर का संबंध।

5.2 यह भी ध्यान रखना आवश्यक है कि इसी प्रकार की पहचान (उपरोक्त पैरा 5.1 में) और निदेशक के पारिश्रमिक का उपचार भी आयकर अधिनियम, 1961 में मौजूद है, जिसमें निदेशकों को दिया गया वेतन कर कटौती स्त्रोत के अधीन है जो कि ( आयकर अधिनियम, 1961 ('आईटी अधिनियम') की धारा 192 के तहत 'टीडीएस') कटौती के लिए उत्तरदायी हैं। हालांकि, ऐसे मामलों में जहां पारिश्रमिक पेशेवर फीस की प्रकृति में है और वेतन नहीं है, वही आईटी अधिनियम की धारा 194 जे के तहत कटौती के लिए उत्तरदायी है।

 5.3। तदनुसार, यह स्पष्ट किया गया है कि निदेशक के पारिश्रमिक का वह हिस्सा जो किसी कंपनी की पुस्तकों में वेतन के रूप में घोषित किया गया है और आईटी अधिनियम की धारा 192 के तहत टीडीएस के अधीन है, सीजीएसटी अधिनियम, 2017 की अनुसूची III के संदर्भ में एक कर्मचारी द्वारा नियोक्ता को या उसके रोजगार के संबंध में सेवाओं के लिए कर योग्य नहीं हैं।

 5.4 यह स्पष्ट किया गया है कि कर्मचारी निदेशक के पारिश्रमिक का वह हिस्सा जो कंपनी के खातों में ‟वेतन के अलावा अन्य रूप से घोषित किया जाता है और आईटी अधिनियम की धारा 194 जे के तहत पेशेवर या तकनीकी सेवाओं के लिए फीस के रूप में टीडीएस के अधीन किया जाएगा। सेवाओं को प्रदान करने के लिए जो सीजीएसटी अधिनियम की अनुसूची III के दायरे से बाहर है, और इसलिए, कर योग्य है। इसके अलावा, अधिसूचना संख्या 13/2017 - केंद्रीय कर (दर) दिनांक 28.06.2017 के अनुसार, उक्त सेवाओं के प्राप्तकर्ता यानी कंपनी, रिवर्स चार्ज आधार पर इस पर लागू जीएसटी का निर्वहन करने के लिए उत्तरदायी है।

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