GST Liability on Payments under Share Purchase Agreement to Old Shareholders

[Sudhir M]

Company A has one shareholder, Company S. A new company has acquired 100% of Company A's shares from Company S under a Share Purchase Agreement. According to the agreement, there are certain incomes (such as incentives under PLI or claims from the government) that Company A will receive and subsequently pay to Company S (the old shareholder).

Will the amounts paid by Company A to Company S, whether from future receipts or profits, be liable for GST?

AI Summary

Shareholder Transfer Exempts Future Incentive Payments from GST Under Specific Transactional Conditions and Regulatory Interpretations A company acquired shares from an existing shareholder under a Share Purchase Agreement. The key issue involves determining GST liability for future payments related to government incentives and claims. Based on expert analysis, these payments do not constitute a taxable supply under GST regulations. The transactions are considered transfers of benefits or reimbursements, which fall outside the scope of goods and services taxation, particularly when linked to government incentive schemes.