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Service Tax liability of Salary of Managing Director


Service Tax is not leviable on full time directors

The services of Managing Director and other full time Directors strictly fall within the employer-employee relationship and is recognised as such by Companies Act. MCA circular also confirms that ST is payable only on fees paid to non-whole-time directors.

This being the factual position, the author appears to have misinterpreted the taxability of full-time directors, clearly with an eye on revenue and perhaps, some pending audit paras.

The sarcastic and fleeting reference of the Author ("why so much fuss") to the availability of Cenvat credit on Director Service as eligible input service also is unwarranted, as the availability of Cenvat does not decide taxability, and also the conclusion does not consider the additional cost to trading entities, other entities not within the Excise/ST net, and entities with huge Cenvat pile.
Viswanathan

Viswanathan Sivaraman 25/08/2015

 

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