GST on movie co-production

[ROHIT GOEL]

Parties A and B have entered into contract to co-produce a movie in 50-50 basis. Both parties shall have equal rights in the movie. The revenue would also be shared equally by way of an escrow arrangement.

However, entire production cost will be borne by A while B will reimburse A for 50% of expense. Assuming that this reimbursement to A by B will be liable to GST, whether this would be treated as permanent transfer of Intellectual property rights and thus taxable@12% or taxable under residual services head@18%.

Please provide your views.

AI Summary

GST Implications on Movie Co-Production Reimbursements: Intellectual Property or Residual Services? Guidance from Circular No. 35/9/2018-GST Parties A and B entered into a contract to co-produce a movie, sharing revenue equally through an escrow arrangement. A will cover the full production costs, with B reimbursing 50% to A. The query concerns whether this reimbursement is subject to GST as a transfer of intellectual property rights at 12% or under residual services at 18%. Responses suggest that the reimbursement may not constitute a taxable supply, and thus not subject to GST, especially if structured as a joint venture. It is also suggested that forming a separate entity could avoid GST implications, aligning with guidance from Circular No. 35/9/2018-GST.