Related Persons GST Act 2017 of India and Old Model GST Law

By | May 4, 2017
(Last Updated On: May 5, 2017)

Related Persons – CGST Act 2017 of India

New Definition of Related Person – CGST Act 2017

Related persons GST Act 2017 are defined in Explanation to Section 15 of CGST Act 2017 as follow

Explanation.—For the purposes of this Act,—

(a) persons shall be deemed to be “ related persons ” if—

(i) such persons are officers or directors of one another’s businesses;
(ii) such persons are legally recognised partners in business;
(iii) such persons are employer and employee;
(iv) any person directly or indirectly owns, controls or holds twenty five per cent or more of the outstanding voting stock or shares of both of them;
(v) one of them directly or indirectly controls the other;
(vi) both of them are directly or indirectly controlled by a third person;
(vii) together they directly or indirectly control a third person; or
(viii) they are members of the same family;

(b) the term “person” also includes legal persons;

(c) persons who are associated in the business of one another in that one is the sole agent or sole distributor or sole concessionaire, howsoever described, of the other, shall be deemed to be related.

[ Note : The word ” Family ”  has been defined under Section 2(49) of CGST Act 2017 as follow:-

(49) “family” means,—

(i) the spouse and children of the person, and

(ii) the parents, grand-parents, brothers and sisters of the person if they are wholly or mainly dependent on the said person; ]

Old Definition of Related Person in Revised Model GST Law ( Nov 2016) –

As per Section 2(84) of Revised Model GST Law

(84) persons shall be deemed to be “related persons’’ if only –

(a) they are officers or directors of one another’s businesses;

(b) they are legally recognized partners in business;

(c) they are employer and employee;

(d) any person directly or indirectly owns, controls or holds twenty five per cent or more of the outstanding voting stock or shares of both of them;

(e) one of them directly or indirectly controls the other;

(f) both of them are directly or indirectly controlled by a third person;

(g) together they directly or indirectly control a third person; or

(h) they are members of the same family;

Explanation I. – The term “person” also includes legal persons.

Explanation II. – Persons who are associated in the business of one another in that one is the sole agent or sole distributor or sole concessionaire, howsoever described, of the other, shall be deemed to be related

Old Definition of Related Person in Model GST Law –June 2016 )

As per Section 2(82) of Model GST Law June 2016

(82) persons shall be deemed to be “related persons’’ if only –
(a) they are officers or directors of one another’s businesses;
(b) they are legally recognized partners in business;
(c) they are employer and employee;
(d) any person directly or indirectly owns, controls or holds five per cent or more of
the outstanding voting stock or shares of both of them;
(e) one of them directly or indirectly controls the other;
(f) both of them are directly or indirectly controlled by a third person;
(g) together they directly or indirectly control a third person; or
(h) they are members of the same family;

Explanation I. – The term “person” also includes legal persons.

Explanation II. – Persons who are associated in the business of one another in that one is
the sole agent or sole distributor or sole concessionaire, howsoever described, of the
other, shall be deemed to be related.

 


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