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Microlesson · 5-min read

RCM on Director's Services and Personal-Capacity Supplies

# RCM on Director's Services

## Entry 6 — Director Services

SupplierServiceRecipient
A director of a company / body corporateServices supplied to the company / BCCompany / Body corporate located in TT

## When is Director's Remuneration Taxable under GST?

### Case A — Director is NOT an Employee

  • Covers independent directors or directors whose services do not fall under Schedule III.
  • Remuneration is taxable under GST; the company pays under RCM.

### Case B — Director IS an Employee

Determine the nature of the relationship — 'contract OF service' (employment) vs 'contract FOR service' (independent professional).

Treatment in books / TDS sectionGST Treatment
Paid as salary, TDS deducted u/s 192 of Income-tax ActNot taxable under GST — covered under Schedule III (employer-employee)
Paid separately as fees, TDS deducted u/s 194J (professional/technical fees)Not covered under Sch III → Taxable under RCM in company's hands

## Services in Personal Capacity

Services rendered by a director in his personal/private capacity (e.g., renting of his own immovable property to the company) are:

  • NOT covered under the director-services RCM entry.
  • Taxed under the normal provisions applicable to that supply (e.g., renting RCM under Entry 5AA/5AB if applicable).

Worked example

### Example 1

Example 1 (Independent director): Mr. A, an independent director of XYZ Ltd, is paid sitting fees of ₹1,00,000. Company pays GST under RCM on ₹1,00,000.

### Example 2

Example 2 (Whole-time director on salary): Mr. B is a whole-time director paid a salary of ₹20 lakh p.a. with TDS u/s 192. Not taxable under GST (Schedule III).

### Example 3

Example 3 (Mixed remuneration): Mr. C is a director paid ₹15 lakh as salary (TDS u/s 192) and ₹5 lakh as professional fees (TDS u/s 194J). The ₹15 lakh is outside GST; the ₹5 lakh is taxable under RCM in the company's hands.

### Example 4

Example 4 (Personal capacity – renting): Director leases his own building to the company. This is a renting transaction in personal capacity → director-services RCM entry does NOT apply; instead, the renting RCM provisions apply.

⚠️ Common exam mistakes

  • Charging GST on salary paid to whole-time/executive directors — salary is outside GST due to Schedule III.
  • Treating all director remuneration alike — bifurcate based on TDS section / employment status.
  • Applying director-services RCM entry to a director's renting of immovable property — that falls under the renting entries, not Entry 6.
Reference: Entry 6 — Notification No. 13/2017-CTR; Schedule III to CGST Act; Circulars on director remuneration
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