GST on Partners Remuneration and Interest

[Krishna Murthy]

Sir, is GST applicable on amount received by partners from the partnership firm as Remuneration and Interest. Whether the same fall under the definition of 'supply' under GST? If yes whether the same are exempt supplies?

[Atul Rathod]

No, GST is not liable on remuneration received by partner as the same will be treated as transaction in money. And also could it shall be treated as self service as partners and firm would be treated as one in terms of partnership act I understand.

[Ganeshan Kalyani]

In my view, GST is not applicable.

[Krishna Murthy]

Thanks for your reply. In that case, since partners and firm are same, both remuneration and interest are outside the ambit of supply and hence cannot even be considered for aggregate turnover. Can we take that view? In our case, if the both are considered for aggregate turnover, the partner would be required to obtain registration and hence liable to tax.

[KASTURI SETHI]

Dear Querist,

In your view, such remuneration and interest must be an integral part of 'non-supply' (should be part of Schedule-III) in order to avoid being included into the aggregate turnover. Hence you are not satisfied with 'exemption' or non-applicability of GST. Both are not part of Schedule-III. You will have to take shelter of decisions of AARs and case laws. It also depends upon the terms and conditions of the agreement. So case laws/decisions of AARs have to be read with the agreement.

AI Summary

GST on partners' remuneration and interest: whether these payments constitute taxable supply or fall outside aggregate turnover. Whether GST applies to partners' remuneration and interest is contested: some treat these receipts as transactions in money or as self-supply, excluding them from taxable supply and aggregate turnover, while others note neither is listed in Schedule III as a non-supply and that treatment depends on the agreement and advance rulings or case law.