REGARDING GST APPLICABILITY IN CASE OF INTEREST AND REMUNERATION

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This discussion clarifies GST applicability for partners receiving interest and remuneration from their firm. While the total amount might exceed the £20 lakh threshold, such payments are considered a share of profit. As they fall outside the definition of goods and services, they are excluded from aggregate turnover, meaning GST registration may not be required based on these specific income streams.

Suresh S. Tejwani

Suresh S. Tejwani (Querist)

29 October 2022 Mr.A has contract income of Rs.16 lakhs for the financial year 2021-22. He has interest and remuneration total of Rs. 13.25 lakhs. The aggregate total including interest and remuneration exceeds 20 lakhs limit of GST. Whether Mr. A is liable for GST registration or not ?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

29 October 2022 Whether the interest & remuneration are from partnership firm, as being partner of the firm?

Suresh S. Tejwani

Suresh S. Tejwani (Querist)

29 October 2022 Yes interest and remuneration received from partnership firm. He is partner in the firm

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

29 October 2022 Such remuneration & interest is in substance nothing but share of profit and being transaction in money / application of money, it shall be outside the scope of supply. So, it is excluded from the definition of goods (Sec 2(52) of the CGST Act) and services (Sec 2(102) of the CGST Act) and thus distribution of share of profit by a firm to its partners would be non-supply / outside scope of supply and thus would not be included in the aggregate turnover of the partner.

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