Related persons Vs Distinct Persons under GST Act 2017

Related persons - Explanation to Section 15

(a) Persons are 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 25% 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.

Distinct persons – Section 25(4) & (5)

Persons are deemed to be distinct persons if the following conditions are satisfied :

(4)

Ø A person who has obtained (or is required to obtain)

Ø more than one registration, (whether in one State or Union territory or more than one State or Union territory)

Ø shall, in respect of each such registration,

Ø be treated as “distinct persons” for the purposes of this Act.

(5)

Ø A person who has obtained (or is required to obtain) registration

Ø in a State or Union territory in respect of an establishment,

Ø has an establishment in another State or Union territory,

Ø then such establishments shall be treated as

Ø “Establishments of distinct persons” for the purposes of this Act.