Services to related person

[Kaustubh Karandikar]

Amount is paid by XYZ Pvt. Ltd. directly to the vendors in relation to new Residential Flat owned by the Director of XYZ Pvt. Ltd. The director is an wholetime director. This amount is initially paid by XYZ to the vendors and then is adjusted against the loan earlier given by the director to XYZ. If no amount is shown as outstanding to be paid to director against loan given by director, the amount paid to vendors by XYZ is shown as loan given to director in the books of accounts. Is XYZ liable to pay GST on the amount paid to vendors since it will be treated as service given to related person?

AI Summary

Service to related person: GST arises where company pays vendors for director's residential flat and adjusts it as loan. Company payments to vendors for a director's residential flat, adjusted against loans to the director or recorded as loans in the company's books, pose whether such payments constitute a service to a related person attracting GST, hinging on transaction characterization, nature of consideration, and GST treatment of benefits conferred on related parties via third party payments and intercompany adjustments.