Can a Director Be Personally Liable for Company GST Dues?
GSTZone Desk · Updated 2026
Short answer
Generally, no — a director isn’t personally liable for a company’s GST dues while it’s a normal going concern. But under Section 89, if a PRIVATE company goes into liquidation and its GST dues can’t be recovered from the company, directors who held office during the relevant period become jointly and severally liable, unless they can show the non-recovery wasn’t due to their own negligence or breach of duty.
In detail
The core principle of a company as a separate legal entity generally holds under GST too — day-to-day unpaid GST dues of an operating company are the company’s liability, not the personal liability of its directors, in the ordinary course.
Section 89 creates a specific, narrower exception tied to a specific scenario: a PRIVATE company (this provision doesn’t generally extend to public companies) that has gone into liquidation or winding up, where the tax dues simply cannot be recovered from the company’s own assets. In that scenario, every person who was a director during the period the tax was due becomes jointly and severally liable — meaning the department can pursue any one of them for the full amount, not just a proportionate share.
The provision does build in a defence: a director can escape this liability by proving that the failure to recover the dues from the company isn’t attributable to any gross neglect, misfeasance, or breach of duty on their part in relation to the company’s affairs — so it isn’t an automatic, unconditional trap for every director of every liquidated company.
GSTZone tip
If you’re a director of a private company facing financial distress, document your own diligence around tax compliance decisions as you go — that record is exactly what Section 89’s defence depends on if the company later can’t pay and the department comes looking for a director personally.
Related questions
Does this apply to independent or non-executive directors too?+
The section refers broadly to directors who held office during the relevant period, though an independent director with genuinely no role in financial decisions has a stronger factual basis for the ‘no gross neglect’ defence.
Is this the same as personal guarantee liability for a bank loan?+
No — this is a statutory tax liability provision, entirely separate from any personal guarantee a director might have signed for a company’s loans, which is a contractual matter.
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