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RCM on services by a Director in GST

RCM on services by Director in GST:

Sl. No. Title

RCM on services by a Director in GST

2. RCM applicability on various payments to Directors


Reverse charge is levied as per the provisions of section 9(3) & 9(4). In section 9(3) a right is given to prescribe the supplies to be covered there. RCM on services by a Director in GST is introduced via Notification no. 13/2017. Entry no. 6 of the said notification covers the services provided by a Director to the company in which he is a director. The said entry red as following.

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Category of Supply of Services


Supplier of service


Recipient of Service



Services supplied by a director of a company or a body corporate to the said company or the body corporate.


A director of a company or a body corporate


The company or a body corporate located in the taxable territory.



There can be two interpretations for this entry.

  1. All the services supplied by the Director of a company will be liable for reverse charge.
  2. Only the services supplied by a Director in capacity of a Director will be covered under RCM.

If we take the first view all the services will become liable for reverse charge. E.g. A Director let out his property to company. The rent will also be liable for reverse charge by company. In the other case only the sitting fees of a Director will be liable for GST.

If we read the language of above mentioned entry it seems like all the services of a Director will be liable for RCM. Its heading is covering the nature of supplier. If a supplier is a Director then RCM will be there. But if I compare it with other entries this view may seems to be wrong.

e.g. entry no 7 & 8 covers the services by an insurance agent and recovery agent are covered. Same language is used for them too. Can we say that rent paid by bank to a person, who is also a recovery agent will be covered by the RCM? In this case it looks really weird. But still the language of even those entries will cover other supplies also.

In the light of above provisions it is prudent on the part of a company to pay the tax in RCM and claim the input tax credit of the same.

RCM applicability on various payments to Director:

Now next important question is whether all payment to Directors will be covered here. Let us have a look on various payments given to a director.

  1. Sitting fees: They will be covered under RCM as per entry no. 6 of notification no. 13/2017 CT)( R)
  2. Director’s remuneration: If it is in terms of employment it will not be covered. Any supply by an employee is outside the preview of GST itself. But if it is not under any employment contract it will be covered.
  3. Any other service: It is disputed but as per plain reading of the provision it will also be covered under RCM.

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Profile photo of CA Shafaly Girdharwal CA Shafaly Girdharwal


New Delhi, India

CA Shaifaly Girdharwal is a GST consultant, Author, Trainer and a famous You tuber. She has taken many seminars on various topics of GST. She is Partner at Ashu Dalmia & Associates and heading the Indirect Tax department. She has authored a book on GST published by Taxmann.

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