Reverse Charge Mechanism Under GST Regime
Under the GST laws, usually the supplier of goods or services pays the tax on supply. But under the Reverse Charge Mechanism, the receiver of the goods is liable to pay the taxes.
RCM
GST on Director’s Remuneration on RCM basis
As per the GST laws, if the services are provided by an employer to its employees in accordance with the employment agreement, then it is neither considered as supply of goods nor as supply of services. Therefore, GST will not be applicable in such cases. On the other hand, if the services are not classified as employer employee relationship, then GST will be applicable. This is in accordance with the CBIC’s circular on applicability of GST on director’s remuneration vide CGST circular no. 140/2020 dated 10th June, 2020.