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

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

Employer and employee are deemed related persons under the Explanation to Section 15. Regular trading, a small shareholding below the twenty-five per cent threshold, or merely sharing a supplier does not make persons related under the statutory list.

  1. AA supplier and a recipient who have traded regularly for ten years at market prices
  2. BA company and a person who holds 10% of its voting shares, with nothing else linking them
  3. CTwo persons who are employer and employeeCorrect
  4. DTwo unrelated customers of the same supplier

Explanation

The Explanation lists employer and employee as related persons. Long trading history alone does not create relationship, and a 10% holding is below the 25% threshold that applies to holding in both persons. Two customers of one supplier have no listed connection.

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