Recommendation of 40th GST Council Meeting dated 12th June 2020

Following relaxation was recommended in GST Council Meeting for filing of GSTR Returns dated 12-06-2020. The Same would be given effect through relevant circulars/ Notifications.

• Relaxation for Taxpayers having aggregate turnover up to ₹5 Crore by waiver of late fee and Interest if the GSTR-3B for the period May 2020 to July 2020 are furnished by Sept. 2020 ( dates to be notified ).
• One time extension in period for seeking revocation of cancellation of registration To facilitate tax payers who could not filed their cancelled GST registration resorted in time, an opportunity is being provided for filing of application of revocation of cancellation registration up to 30.09.2020 in all cases where registration have been cancelled till 12.06.2020.
• As per the earlier issued notification no. 31/2020 issued below specified date was notified to file GSTR-3B for small tax payers, now relaxation is provided to small tax payers by reducing the rate of interest for filing GSTR-3B for the period Feb 20 to April 20 beyond specified dates to 9% pa. from 18% if filing is done till 30.09.2020:

No.	Taxpayer on the basis of	Rate of	Tax Period	Specified dates for filing of       GSTR-3B (Condition)
1	Turnover  ₹1.5 Cr- ₹5Cr	NIL	Feb 20, March 20	On or before 29th day of June, 2020
			April,20	On or before 30th day of June, 2020
2	Turnover < ₹1.5Cr	NIL	Feb,20	On or before 30th day of June, 2020
			March,20	On or before 3rd day of July, 2020
			April,20	On or before 6th day of July, 2020

• Relaxation for July-17 to Jan- 20, in filing GSTR-3B return:

Return	Period	Late Fee		Condition
GSTR 3B	July-17 to Jan 2020	NIL if no tax liability	Maximum 500 per return in case of liability	GSTR-3B furnished between 1.07.2020 to 30.09.2020

GST Liability on Director's remuneration

The issue of remuneration to directors has been examined under following two different categories:

• leviability of GST on remuneration paid by companies to the independent directors defined in terms of section 149(6) of the Companies Act, 2013 or those directors who are not the employees of the said company; and
• leviability of GST on remuneration paid by companies to the whole-time directors including managing director who are employees of the said company.

Whether or not a "Director" is an employee of the company. In this regard, from the perusal of the relevant provisions of the Companies Act, 2013, it can be inferred that:

• the definition of a whole time-director under section 2(94) of the Companies Act, 2013 is an inclusive definition, and thus he may be a person who is not an employee of the company.
• the definition of "independent directors" under section 149(6) of the Companies Act, 2013, read with Rule 12 of Companies (Share Capital and Debentures) Rules, 2014 makes it amply clear that such director should not have been an employee or proprietor or a partner of the said company, in any of the three financial years immediately preceding the financial year in which he is proposed to be appointed in the said company.

Therefore, in respect of such directors who are not the employees of the said company, the services provided by them to the Company, in lieu of remuneration as the consideration for the said services,  the recipient of the said services i.e. the Company, is liable to discharge the applicable GST on it on reverse charge basis. 

It is hereby clarified that the remuneration paid to such independent directors, or those directors, by whatever name called, who are not employees of the said company, is taxable in hands of the company, on reverse charge basis.

Accordingly, it is clarified that the part of Director's remuneration which are declared as "Salaries" in the books of a company and subjected to TDS under Section 192 of the IT Act, are not taxable being consideration for services by an employee to the employer in the course of or in relation to his employment.

It is further clarified that the part of employee Director's remuneration which is declared separately other than "salaries‟ in the Company's accounts and subjected to TDS under Section 194J of the Income Tax Act as Fees for professional or Technical Services shall be treated as consideration for providing services, and is therefore, taxable. The recipient of the said services i.e. the Company, is liable to discharge the applicable GST on it on reverse charge basis.

Copy of Circular: Clarification in respect of levy of GST on Director’s Remuneration