#whole-time director

CESTAT Hyderabad rules remuneration paid to Managing Directors and Whole-time Directors as salary falls under Section 65B(44)(b) exclusion, dismissing a Rs. 9.98 crore Service Tax demand. The ruling clarifies employer-employee relationship for tax purposes, impacting corporate tax structuring and director compensation models.

CESTAT Chennai rules that remuneration paid to whole-time directors under an employer-employee relationship is exempt from service tax under the reverse charge mechanism, as per Notification No. 45/2012-ST. The decision clarifies that companies need not withhold service tax on directors' salaries where a valid employment contract exists, providing relief from demand notices and penalties.

The CESTAT holds that remuneration paid to whole-time directors is salary, not a service, and thus exempt from service tax under Section 65B(44) of the Finance Act, 1994.