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

Taxable supply under GST: reimbursement in co-production may be a supply affecting GST liability and ITC entitlement.
Whether B's reimbursement to A is a taxable supply depends on substance: if payments are investments in a joint venture or to a separate entity, they are not taxable; if A recovers costs as consideration for providing services or rights to B, the recovery may be a taxable supply and affect GST liability and input tax credit claims.