GST & Indirect Tax

GST on Director Services and Reverse Charge: Step-by-Step Compliance Playbook

📅 June 2026GST✔ cbic-gst.gov.in

Reviewed by CA Nikhil Gupta · Last reviewed 19 June 2026

Director fees and sitting fees paid by Indian companies to directors attract GST under reverse charge — meaning the company pays GST, not the director. This is one of the most commonly missed GST compliance requirements for Indian companies. The playbook covers who is liable, how to calculate, when to file and what ITC can be claimed.

For the connected rule, example or next step, see GST on Legal Services Under Reverse Charge: Practical Case Study for Indian Users.

The Reverse Charge Rule for Director Services

Under Notification 13/2017-CT(Rate) Entry 6, services supplied by a director of a company to that company are liable to GST under Reverse Charge Mechanism (RCM). This means:

For the connected rule, example or next step, see GST on Hotel Bookings, MICE Events and Travel Packages: Step-by-Step Compliance Playbook.

The company (not the director) pays 18% GST on the director's remuneration/sitting fees
The director need not register for GST solely for this purpose — the liability is on the recipient company
If the director is also a whole-time employee (executive director on payroll), salary component is not subject to RCM — only fee-based payments qualify

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What Payments Attract RCM?

Payment Type	RCM Applicable?	Notes
Sitting fees for board meetings	✅ Yes	18% RCM by company
Commission to non-executive directors	✅ Yes	18% RCM by company
Salary to whole-time director on payroll	❌ No	Employer-employee — not a supply under Schedule III
Professional fee to director for specific consultancy	✅ Yes	18% RCM; also TDS under Section 194J
Reimbursement of expenses to director (pure pass-through)	⚠️ Case by case	If pure agent conditions met: no GST; otherwise 18% RCM

For the connected rule, example or next step, see GST Export of Services vs Intermediary Services: The Practical Difference.

Step-by-Step Compliance for Companies

Identify all non-executive director sitting fees and commissions each month
Issue a self-invoice for the RCM supply, since the director typically does not issue a GST tax invoice — under Circular 140/10/2020-GST and CGST Rules 46 and 52, the recipient company must raise a self-invoice (with all particulars of a normal tax invoice) and a payment voucher at the time of making payment to the director
Determine the place of supply and tax head: place of supply for director services is the location of the recipient company (Section 12(2), IGST Act). Whether the supply is inter-state (IGST) or intra-state (CGST+SGST) then depends on comparing the director's own location (the supplier, ordinarily their usual place of residence) against that place of supply — if the director resides in a different state from the company, it's IGST; if in the same state, it's CGST+SGST. It is not correct to assume CGST+SGST applies automatically merely because the company is in a particular state; the director's location matters for the tax-head determination.
Calculate RCM: 18% on the gross amount
Pay RCM liability in cash via the GST portal (Form PMT-06), generally by the same due date as the relevant GSTR-3B — for monthly filers this is the 20th of the following month, but QRMP-eligible taxpayers who have opted for quarterly GSTR-3B follow the QRMP payment and filing calendar instead (monthly PMT-06 payment by the 25th for the first two months of the quarter, with the quarterly GSTR-3B due by the 22nd/24th of the month after quarter-end depending on the state) — the "pay by the 20th" rule is not universal across all RCM-liable taxpayers
Declare in GSTR-3B: Row 3.1(d) — inward supplies liable to RCM; Row 4A(3) — ITC on RCM
Claim ITC: RCM GST paid in cash is reported and claimed as ITC through GSTR-3B in the period of payment (Section 16(1)) — it does not auto-populate in GSTR-2B the way ITC on regular supplier-reported invoices does, because there is no third-party supplier filing a return that would feed GSTR-2B. The company must self-track and self-report the RCM liability and the corresponding ITC claim directly in GSTR-3B based on its own self-invoice and payment voucher records.

⚠️

Cash Payment Mandatory: RCM GST must be paid in cash — existing ITC balance cannot be used to pay RCM. After payment, the same amount can be claimed as ITC through GSTR-3B (if the company's business is fully taxable). Net cash impact is typically nil over a tax period for fully taxable companies, but the cash outflow for RCM payment is real and must be tracked, reported and claimed manually rather than relying on any auto-population.

Case Study: Listed Company — Quarterly Board Meetings

Case Study: Techvance Ltd — 5 Independent Directors

Annual sitting fee: ₹1.5L per director × 5 = ₹7.5L

RCM GST (18%)

₹7.5L × 18% = ₹1.35L per year

Payment

Cash — ₹1.35L paid quarterly to GST portal

ITC claimed

₹1.35L — available as ITC same month

Net cost

Nil (fully taxable company); only cash flow timing impact

Techvance's CFO ensures RCM is paid before 20th of the month following each board meeting. Missing RCM payment triggers 18% interest per annum on the outstanding amount.

FAQ

For the connected rule, example or next step, see Cross Charge vs ISD: Group Company Cost Allocation Under GST.

Does a director need to register for GST because of sitting fees? +

No. The GST liability on director sitting fees is on the company (as recipient under RCM), not on the director. The director is not required to register for GST solely because they receive sitting fees from one or more companies. However, if the director separately provides professional consulting services above ₹20L threshold, registration is required for those services.

Is GST on director fees available as ITC to the company? +

Yes. GST paid by the company under RCM on director fees is available as Input Tax Credit under Section 16 of the CGST Act. For a fully taxable company, the RCM paid and ITC claimed net to zero — no real cost. For exempt-supply companies (e.g., banks, insurers making primarily exempt supplies), ITC may be partially blocked under Rule 42.

What is the place of supply for director services? +

Place of supply for director services is the location of the company (recipient), under Section 12(2) of the IGST Act. But that alone doesn't decide whether CGST+SGST or IGST applies — that depends on comparing the place of supply against the director's own location as supplier. If the director's location and the place of supply (company's location) are in the same state, the company pays CGST+SGST of that state; if the director is based in a different state from the company, the supply is inter-state and IGST applies instead. So a company in Maharashtra paying a director based in Karnataka would self-invoice under IGST, not CGST+SGST, even though the company itself is in Maharashtra.

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Source and review trail

Use the current official instrument, portal or regulator publication before acting. This panel separates the category authority from page-specific references.

Primary category: GST & Indirect Tax
Official starting point: www.gstcouncil.gov.in

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Primary sources & related provisions

Statutory provisions referenced in this guide: