GST on Director Remuneration: When is RCM Applicable?
Understand the difference between executive director salaries (salaried) and independent director fees (subject to RCM).
Director Remuneration Rules
Remuneration paid to independent directors is subject to 18% GST under the Reverse Charge Mechanism. However, regular salaries paid to whole-time or executive directors (which trigger PF and TDS under Section 192) are exempt from GST as employee services.
Verifying employment contracts
Check the employment agreement details of executive directors to confirm they qualify as employees. Keep PF registration documentation and Form-16 entries ready to defend tax exemptions during audits.
CA Amit Sharma
Verified Advisory LeadAmit is a Chartered Accountant (ICAI membership #409214) and FEMA compliance advisor with over 8 years of experience advising technology startups, digital marketing agencies, and remote professionals on zero-rated GST exports, DTAA declarations, and RBI inward remittance audits.
Disclaimer: The information provided above is for educational purposes only and does not constitute formal legal or financial advice. Please verify details using official circulars issued by the Central Board of Indirect Taxes & Customs (CBIC) and RBI.