SERVICE TAX ON COMMISSION PAID TO MANAGING DIRECTOR / DIRECTORS BY THE COMPANY

The payments made by Companies to Directors cannot be termed as payments for providing management consultancy service. Therefore, it is clarified that the amount paid to Directors (Whole-time or Independent) is not chargeable to service tax under the category ‘Management Consultancy
service’. In case such directors provide any advice or consultancy to the company, for which they are being compensated separately, such service would become chargeable to service tax.