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CA Intermediate · Taxation · Supply under GST

Vihaan Pvt. Ltd., Mumbai, appoints Mr. Das, a director, who is paid Rs 6,00,000 as fee for services rendered as director (not an employee), and also Rs 20 lakh salary to employee Ms. Rao under an employment contract. Which statement is correct?

Services by an employee to the employer in the course of employment fall under Schedule III and are not a supply. A director who is not an employee supplies taxable services, and the company must pay GST on them under reverse charge.

  1. ABoth are outside GST as they are services by employee
  2. BBoth are taxable under forward charge only
  3. CDirector's services are taxable (reverse charge applies to the company), while salary to employee under employment is neither supply of goods nor servicesCorrect
  4. DSalary is taxable but director fee is not

Explanation

Schedule III treats services by an employee to the employer in the course of employment as neither goods nor services. Services by a director in a non-employee capacity are not covered by this entry, so they are taxable supply; the company pays tax under reverse charge. Option A wrongly treats directors like employees.

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