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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 of persons is deemed to be 'related persons'?

Members of the same family are deemed related persons under the Explanation to Section 15. Buying from a common supplier, holding 10% of only one company, or long trading do not create relationship. The shareholding test needs 25% or more of both persons.

  1. ATwo companies that buy goods from the same supplier at the same price
  2. BA company and a person who holds 10% of the voting shares of only that company
  3. CTwo persons who are members of the same familyCorrect
  4. DA supplier and a customer who have traded regularly for ten years

Explanation

The Explanation lists members of the same family as related persons. Common supplier, a 10% holding in one company only, or a long trading history do not appear in the list. The shareholding test needs 25% or more of the voting stock of both persons.

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