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ii. Legal Provision:-
Ü As per section 9(3) of CGST Act, if services are provided by director to the company located in
taxable territory, then the company is liable to pay tax under reverse charge.
Ü As per CBIC Clarification, if director's remuneration is declared as salaries in books of a
company and subjected to TDS u/s 192 of the Income-tax Act (IT Act), then that is not taxable
being consideration for services by an employee to employer in course of or in relation to his

employment as per para 1 of Schedule III.
Ü Further, director's remuneration which is declared separately other than salaries in company's
accounts and subjected to TDS u/s 194J of IT Act as fees for professional or technical services are
outside the scope of Schedule III and is therefore, taxable.

Discussion & Conclusion:-
Ü In this case, salary of Rs. 60000 is not taxable as it gets covered under para 1 of Schedule III.
Ü Further, Rs. 65,000 declared separately other than salaries by Sun Moon Company Private
Limited's is a consideration for professional services which is outside the scope of Schedule III

and is therefore, taxable.
Ü The recipient of services i.e. the Sun Moon Company Private Limited, is liable to discharge the
applicable GST on it on reverse charge basis.

CCP 03.02.07.00
Arpan Singhania is a director in Narayan Limited.
The company paid him the sitting fee amounting to ₹ 25,000, for the month of January.
Further, salary was paid to Arpan Singhania amounting to ₹ 1.5 lakh for the month of January
on which TDS was also deducted as per applicable provisions under Income-tax law.

Tapasya & Associates, in which Arpan Singhania is a partner, supplied certain professional
services to Narayan Limited in the month of January for an amount of 2 lakh. ₹
Discuss the person liable to pay tax in each of the supplies involved in the given case.

Answer:-
Legal Provision:-
As per reverse charge notification, if services are supplied by director of a company to the said company
located in the taxable territory, then GST is payable on reverse charge basis by recipient.
Discussion & Conclusion:-

i) Sitting Fee paid to director:-
Ü Here, Narayan Limited (i.e. Company) paid sitting fee ₹ 25,000 to its director-Arpan Singhania.
Ü Thus, Narayan Limited is liable to pay GST under reverse charge
ii) Salary paid to director:-

Ü As per CBIC circular, if director's remuneration is declared as Salaries in books of company &
subjected to TDS u/s 192 of Income-tax Act, then that is not taxable under GST because it is the
consideration for services by an employee to employer in the course of or in relation to his
employment as per Para 1 of Schedule III.

Ü Therefore, the salary received by Arpan Singhania of 1.5 lakh is not liable to GST. ₹

iii) Services provided by Tapasya & Associates:-
Ü In this case, the fact that Arpan Singhania is a partner in Tapasya & Associates and also a director in

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