GST Implications In Case of Sharing of Revenue and Profit

Published At: 24-Jul-2020

Problem

In the instant case, an Individual (‘Mr X’) owns and maintains the Sports Turf on behalf of an Indian Company. The Indian Company receives the consideration from the players who use the facilities of Sports Turf. Further, as per the terms of agreement between Mr X and the Indian Company, Mr X receives the consideration from the Indian Company in the form of share of profit and share of revenue for renting and maintaining the turf facilities. The Indian Company approached our team regarding advice on the GST implications for the following transactions:- 

  • Fees received by the Indian Company from the players 
  • Share of profit and share of revenue received by Mr X. 


Solution

Our dedicated team of GST Experts studied the query in detail and advised them regarding the GST implications for the aforesaid transactions. In the instant case, based on the facts of the case and documentation, we opined that the Indian Company will be liable to pay GST for the fees received from the players for using the Sports Turf. Further, Mr X will also be liable to pay GST on the share of profit and share of revenue received from Indian Company as the same represents the consideration for providing the services of  renting and maintaining the Turf facilities. Although the nomenclature appears to be sharing revenue, in fact there are two independent supplies - one from Mr.  X to the Indian Company and another from the Indian Company to the Players. Accordingly, GST will be applicable on both the independent supplies. We provided the solution after examining various provisions of the GST law and ensured that all the provisions of the GST Act are complied. The GST implications will differ from case to case based on the facts.


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