Revenue sharing arrangement under gst

[SIVARAMA KUMAR]

Whether Revenue sharing (not profit sharing) is taxable under Gst or it is considered as money transaction or is it a non gst activity.

Please offer your comments.

[Ganeshan Kalyani]

In my view, it is taxable. GST is on supply.

[Himansu Sekhar]

Please elaborate with example

[Atul Rathod]

In service tax there was a view that revenue sharing would be on principle to principle basis therefore there would not be exact service. but in GST it would be taxable. Further request you to elobrate your query to give specific answer.

[KASTURI SETHI]

In Service tax regime, revenue sharing was exempted service.

[SIVARAMA KUMAR]

For example if you provide a consultancy service to your client on which you charge 60% of the total revenue generated by the client ( he pays Gst for the entire revenue generated). In this case the revenue is shared only by the dealer with his counter part ( consultant), Will the consultant raise an invoice to claim the consideration from the dealer in the form of invoice, if so what is the rate of Gst applicable or will it be a money to money transaction as exempted under service tax regime. or will it be proper to claim the expenses under section 37 of the income tax act .

Please offer your comments

[Himansu Sekhar]

You are providing a service and getting consideration which is in the form of a share of the total income. You will pay service tax before 01.07.17 and afterwards you will pay GST.

[KASTURI SETHI]

Revenue sharing is taxable under GST. HSN 999799.

In Service Tax regime, it was classified under the category of BAS and as per para no.11 of Board's Circular dated 13.12.11 (appended below), leviability of Service Tax on revenue sharing was determined on the nature of transaction. Board's circular and different case laws are given below for arriving at correct decision.

Distributors/Sub-distributors of firms & exhibitors of movie - Clarification of

Circular No. 148/17/2011-S.T., dated 13-12-2011

2018 (14) G.S.T.L. 546 (A.A.R. - GST) = 2018 (7) TMI 835 - AUTHORITY FOR ADVANCE RULINGS, KARNATAKAIN RE : UNITED BREWERIES LTD.

2019 (27) G.S.T.L. 257 (Tri. - Mumbai) = 2018 (5) TMI 1470 - CESTAT MUMBAI SADHANA EDUCATIONAL & EMPOWERMENT FOUNDATION Versus C.C.E., PUNE-III

2016 (41) S.T.R. 208 (Tri. - Mumbai) = 2015 (8) TMI 642 - CESTAT MUMBAI CENTRE FOR DEVELOPMENT OF ADVANCE COMPUTING Versus C.C.E., PUNE

[SIVARAMA KUMAR]

Thanks seith sir for your elaborate findings and references.

[Ganeshan Kalyani]

In GST the scope of applicability of GST is widen . At the same time the scope of claiming input tax credit is also widen.

AI Summary

Revenue sharing under GST is taxable as supply of services and requires GST invoicing with input tax credit implications. Revenue sharing where a party provides services in return for a share of the recipient's revenue constitutes consideration for a taxable supply under GST. Such receipts should be invoiced and subjected to GST; historical Service Tax exemptions or principle-to-principle treatments do not control GST treatment. The GST regime broadens the scope of taxable supplies and input tax credit availability, requiring appropriate HSN classification and compliance with invoicing and reporting obligations for service providers receiving revenue shares.