TaxTMI 
TaxTMI 
XYZ (Proprietory Concern) is making payments to third parties such as salary, customs duty, insurance premium etc on behalf of their group companies / related parties. Subsequently, these group companies are paying back these mounts to XYZ as per the availability of funds. Will it have any GST implications for XYZ or the Group Companies?
payment made on behalf of group companies
28 Apr 2023 
5 Replies 
3661 Views Asked by
Related-party supply may attract GST where reimbursements constitute consideration; mere loans repaid do not attract GST.
Where a group concern pays third-party liabilities on behalf of related companies, GST depends on substance: genuine loans and repayments are not taxable, but reimbursements that amount to consideration for services or constitute related-party supplies may attract GST; documentation, contractual terms and accounting treatment determine whether the transaction is a loan (non-taxable) or a taxable service, and an exemption may apply where consideration is interest on loans or advances. (AI Summary)
Where a group concern pays third-party liabilities on behalf of related companies, GST depends on substance: genuine loans and repayments are not taxable, but reimbursements that amount to consideration for services or constitute related-party supplies may attract GST; documentation, contractual terms and accounting treatment determine whether the transaction is a loan (non-taxable) or a taxable service, and an exemption may apply where consideration is interest on loans or advances. (AI Summary)