Profit sharing arrangements gst

[Madhavan iyengar]

A Company X in india exports its products ie goods to its holding company B in Germany at say ₹ 100 and the German company in turn sells them to its customers in Europe at ₹ 100 + margin

Now there is a arrangement between company X and its holding Company B In germany that of goods are sold above ₹ 100 /- then the excess of ₹ 100 will be shared between X in India and B in germany in ratio of 75: 25 is X will get 25% of the excess

Now this excess of 25% which X receives as per arrangement will it be non gst supply being a profit sharing arrangement

experts please clarify

AI Summary

Profit sharing payments: treat as export consideration if linked to sale, otherwise classify as other income outside GST.
Whether a post-sale profit-sharing payment is GST-taxable hinges on its characterisation: if it is additional consideration for the export of goods it forms part of the export consideration and is zero-rated, to be disclosed in GST returns; if it is an independent profit-sharing receipt not linked to the transfer of goods or services it may be treated as other income outside GST and not reported as a supply.