Applicability of GST On : Renting Of Immovable Property and others services by Directors to the Company
Services provided by director of a company or body corporate to the company/body corporate attract RCM and gst is required to be paid by company as per *entry 6 of NN 13/2017*
It was clarified in *Circular 140/10/2020 dated 10-06-2020* that salary paid to director being covered in negative list is not liable to RCM and only services other that as employee shall attract RCM.
Further issues arose regarding services provided *not as or in* capacity of director such as renting of immovable property to the company
Now *Circular No. 201/13/2023 dated 01-08-2023* has clarified that renting of immovable property by director to the company and also other services in personal/private capacity and *not as or in* capacity of director shall not attract RCM.
However it may be pertinent to note that RCM has been imposed in another entry *5AA of NN 13/2017 Inserted by NN 5/2022 w.e.f. 18-07-2022*, on renting of residential dwelling to a registered person. Here it is not specified whether residential dwelling strictly need to be used for residence only. Hence renting of residential dwelling for use as residence or other purposes shall continue to attract RCM and shall not be affected by the above clarification dated 01-08-2023, in the opinion of author, because Circular is with reference to Entry 6 and not entry 5AA of NN 13/2017.
Hence the limited application of circular is towards renting of commercial properties only by director to a company.
Further where *corporate guarantees are given by directors to the bank* on behalf of company in terms of provisions of the *Reserve Bank of India Circular No. RBI/2009-10/70 dated 01-07-2009*, without charging commission under statutory obligation, are provided in course of employment and should also be outside tax net. If these services are not considered in course of employment, still they are quasi capital *(ITAT Ahemdabad in Mircro Links)* and should not taxed. Still further, being statutory obligation, it does not fulfil the components of being called contract even if consideration factor is excluded. Still further clarification in this regard would have settled the issue once for all.
