Revenue sharing agreement

[Ashish Diwedi]

ABC enters into agreement for 25 years with XYZ (A charitable trust) for development, operation & management of Hospital on revenue sharing basis. XYZ owns land and has already constructed 30% of the hospital. ABC will develop, operate & manage the hospital by deploying its resources & man power and collect all revenue and share it as per agreed terms after its commissioning. All income derived from Hospital, being medical services will be exempt from GST. ABC will give ₹ 15 crore as deposit which is refundable after 25 years.

Will service of construction of balance 70% of hospital by ABC be liable to GST assuming the same as deemed joint venture? If yes, at what rate GST is applicable?

Is sharing of revenue of Hospital Income by ABC to XYZ liable to GST?

Deposit being refundable, will there be any GST implication on the same?

AI Summary

Revenue-Sharing Agreement for Hospital Development Raises GST Concerns on Construction, Revenue Sharing, and Deposits A discussion on a revenue-sharing agreement between ABC and XYZ, a charitable trust, for hospital development, operation, and management raised GST-related queries. ABC will develop the remaining 70% of the hospital and manage it, sharing revenue with XYZ. The primary concerns include whether the construction is taxable under GST, the GST implications on revenue sharing, and the refundable deposit. Responses suggest that construction may be taxable, revenue sharing is not liable to GST, and the deposit may not attract GST unless deemed an advance. The discussion also touches on the applicability of various circulars and rulings.