CBIC Issued Clarifications for GST Officers i. GST on Director’s Remuneration, and ii. Refund of Accumulated ITC

CBIC has recently issued two clarifications under section 168(1) of the CGST Act, for their GST officers, to have uniformity amongst them while implementing the Law. The gist of the circulars has been given below:

GST liability under RCM, on Director’s Remuneration

  • GST shall be payable under RCM on remuneration paid/payable to an Independent Director or any other Director who is not an employee of the Company.
  • Remuneration paid/payable to a Director who is an employee of the Company, GST shall be payable on the remuneration as follows:
  • If Company deducts TDS under section 192B of Income Tax Act, 1961, from remuneration paid / payable to a Director – No GST liability under RCM
  • If Company deducts TDS under section 19J, 194H or any other section except for section 192B of Income Tax Act, 1961 – GST shall be payable under RCM by Company.

Our Comments: One should carefully examine the contract of employment between Company and the Director and identify whether TDS has been deducted on remuneration under section 192B or not accordingly GST on RCM basis will be levied.

GST Refund of Accumulated ITC

  • GST officers shall not reject refund claims of ITC on imports, GST paid under RCM, and ISD invoices, just because of the reason that these invoices don’t happen to be appear in Form GSTR-2A of the applicant.

 

Source: Circular No. 139/09/2020 – GST and 140/10/2020 – GST, dated 10.06.2020