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CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · Value of Supply

Under Section 15 of the CGST Act, 2017, which of the following persons are expressly deemed to be 'related persons' for valuation purposes?

Persons associated in business so that one is the sole agent, sole distributor or sole concessionaire of the other are deemed related under the Explanation to Section 15. Mere regular dealing, different States, or a 10% shareholding do not make persons related.

  1. AA supplier and a recipient who merely deal at arm's length on a regular basis
  2. BPersons of whom one is the sole agent or sole distributor or sole concessionaire of the otherCorrect
  3. CA supplier and a recipient located in different States
  4. DTwo persons who each own 10% of the voting shares of a third company

Explanation

The Explanation to Section 15 (clause (c)) deems persons associated as sole agent, sole distributor or sole concessionaire of one another to be related. Regular dealing or different locations do not create relation. Related status through shareholding needs 25% or more of voting stock of both of them, so 10% fails.

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