GST Advisory & Transaction Structuring

GST return filing is compliance on transactions that have already happened — reporting what occurred in GSTR-1 and GSTR-3B each period. Transaction structuring advisory is forward-looking: it analyses a proposed transaction — a business transfer, an inter-company arrangement, a new contract — before it is executed, to determine the correct GST classification, rate, valuation, and place of supply, and to document the reasoning. By the time a transaction reaches the return-filing stage, the structuring decisions have already been made — structuring advisory is what happens before that point.

No — because the transaction documents themselves (the agreement language, the consideration structure, the invoice terms) often determine or constrain the GST classification. A slump sale that is not documented and executed as a genuine going-concern transfer cannot retroactively be treated as GST-exempt at return-filing stage. A related-party pricing structure that does not meet the conditions for the full-ITC proviso under Rule 28 cannot be fixed after the invoices are issued. The window to get the GST treatment right is before the transaction documents are finalised.

GST rates were rationalised with effect from September 2025 into a simplified three-rate structure — 5%, 18%, and a 40% rate reserved for a narrow list of luxury and sin goods (the earlier four-slab 5%/12%/18%/28% structure has been phased out, with most items realigned into the 5% or 18% slabs). The specific rate applicable to your transaction depends on the correct classification of the underlying goods or service, and should be confirmed against the current rate schedule and any transaction-specific notification at the time of structuring, since rate schedules are periodically updated by the GST Council.

A transfer of a business as a going concern is generally treated as a supply of service that is exempt under Notification No. 12/2017-Central Tax (Rate), provided the transaction genuinely meets the going-concern test — meaning the entire business (or an independent part of it), including assets, liabilities, employees, and contracts, transfers together and the transferee continues the same business. If only selected assets transfer, or the business does not continue in substantially the same form, the department can reclassify the transaction as a taxable itemised asset sale, with GST applicable on the full consideration.

Transactions between related persons or distinct persons (e.g., group companies, or the same legal entity registered in different states) are valued under Rule 28 of the CGST Rules — generally at open market value, or the value of a like-kind-and-quality supply. A proviso permits using the invoice value declared even if lower than open market value, where the recipient is eligible to claim full input tax credit — this is a commonly used and legitimate simplification for wholly taxable inter-company services, but it must be applied correctly and consistently.

This is genuinely fact-dependent and has been the subject of extensive litigation and evolving CBIC clarification. Where an employee remains on the payroll of, and under the effective control and supervision of, the entity to which they are seconded (with a genuine employer-employee relationship), the arrangement may fall outside the scope of GST as an employment relationship rather than a supply of manpower service. Where the arrangement is structured more as a manpower supply from one entity to another with a service fee, GST liability under reverse charge can arise. The specific facts of control, payroll, and contractual language all matter.

Not automatically. Export of services qualifies for zero-rating under Section 16 of the IGST Act only if all conditions in the Section 2(6) definition of 'export of services' are met — the supplier is located in India, the recipient is located outside India, the place of supply is outside India, payment is received in convertible foreign exchange (or Indian Rupees where permitted by RBI), and — critically for related-party transactions — the supplier and recipient are not merely 'establishments of a distinct person' under the Explanation to Section 8. Where the Indian entity and the overseas entity fail the distinct-person test, the transaction can be disqualified from export treatment entirely.

Yes, generally. Import of services by a person in India from a supplier located outside India is taxable under the reverse charge mechanism (RCM) under Section 5(3) of the IGST Act, and the Indian recipient must self-invoice, pay the applicable IGST, and can typically then claim it back as input tax credit if used for taxable business purposes (subject to Section 17(5) restrictions). This obligation applies regardless of the recipient's own registration turnover threshold for the specific import transaction.

A composite supply, under Section 2(30) of the CGST Act, is two or more goods or services naturally bundled and supplied together in the ordinary course of business, where one is the principal supply — the whole bundle is taxed at the rate of the principal supply. A mixed supply, under Section 2(74), is two or more individual supplies bundled together for a single price where they are not naturally bundled — the whole bundle is taxed at the highest rate applicable to any item in it. Misclassifying a mixed supply as a composite supply (to claim the lower principal-supply rate) is one of the most common grounds for departmental reclassification and demand.

Where assets and liabilities transfer pursuant to a court- or NCLT-sanctioned scheme of arrangement, and the transfer qualifies as a transfer of a going concern, the transaction is generally treated as outside the scope of 'supply' for GST purposes. However, the transferor's unutilised input tax credit must be formally transferred to the transferee by filing Form ITC-02 on the GST portal — this is not automatic and requires an active filing within the prescribed timeline from the appointed/effective date under the scheme.

If your platform qualifies as an 'e-commerce operator' under Section 2(45) of the CGST Act — meaning you own, operate, or manage a digital or electronic facility for e-commerce — and you facilitate supplies by other sellers and collect payment on their behalf, you are generally required to register (regardless of turnover) and collect Tax Collected at Source (TCS) under Section 52 on the net value of taxable supplies made through your platform. Whether your specific business model falls into 'e-commerce operator' or a simple principal-to-principal or advertising arrangement needs to be tested against the actual transaction flow and payment mechanics.

Yes — through an application to the Authority for Advance Ruling (AAR) under Section 97 of the CGST Act, or on appeal to the Appellate Authority for Advance Ruling (AAAR). An advance ruling is binding on the applicant and the jurisdictional GST officer in respect of that specific transaction, providing certainty before the transaction proceeds. It is a formal, fee-based process with its own timeline — typically several weeks to a few months — and is best reserved for genuinely ambiguous, high-value, or recurring transaction types where the cost and time of the process is proportionate to the exposure being managed.

PNPC scopes each transaction structuring engagement individually based on the complexity of the transaction, the number of entities and jurisdictions involved, and whether the engagement includes document drafting, advance ruling support, or just the structuring memo and advisory conversation. A written scope and fee estimate is provided before work begins — we do not start a structuring engagement without an agreed fee understanding.

Yes, where the client wants it. Many clients engage us for the structuring memo alone and manage return filing through their own accounting team or a separate GST retainer. Others prefer PNPC to also handle the ongoing GST return filing (GSTR-1, GSTR-3B, GSTR-9/9C) so the structuring position is reflected consistently in every subsequent filing without a handoff gap. We are equally set up for both models.

Section 17(5) of the CGST Act lists categories of input tax credit that are specifically blocked even though the underlying purchase is otherwise eligible — for example, motor vehicles (with limited exceptions), certain construction-related expenses on immovable property (other than plant and machinery), employee-related expenses like food, health insurance, and leave travel benefits (unless statutorily mandated or provided as an outward taxable supply), and goods or services used for personal consumption. When structuring a transaction — particularly asset transfers or real estate arrangements — we check whether Section 17(5) blocks ITC that the parties may have assumed would flow through.

GST valuation (under Rule 28 for related/distinct persons) and income-tax transfer pricing (under Section 92C of the Income Tax Act) are governed by separate legal frameworks with different valuation methodologies and different objectives — transfer pricing aims to reflect an arm's-length price for income-tax purposes, while GST valuation aims to reflect open market value for indirect tax purposes. In practice, the two are often — but not always — aligned. We review both together for cross-border related-party transactions so the client does not end up defending two inconsistent valuation positions to two different tax authorities.

At minimum: the written structuring memo setting out the facts as they existed at the time, the legal analysis and classification/valuation conclusion reached, the transaction agreement with GST-relevant clauses, supporting valuation reports where applicable, and evidence that the position was actually implemented consistently in the invoices and returns that followed. This contemporaneous record — created before or at the time of the transaction, not reconstructed afterward — carries significantly more evidentiary weight in an audit or assessment than a retrospective explanation.

Yes. PNPC has operating offices in Chennai, Bangalore, Hyderabad, and Dubai. For a transaction involving an Indian entity and a UAE counterparty or group company, we assess the Indian GST treatment and coordinate with our Dubai team on the corresponding UAE VAT and Corporate Tax treatment, so the transaction is structured coherently across both jurisdictions rather than each side being advised in isolation by unconnected firms.

It can be, depending on the facts, the amount involved, and how the error was discovered. GST law permits self-correction through subsequent returns within prescribed timelines, and in some cases through voluntary payment with interest before a notice is issued, which can materially reduce penalty exposure compared to waiting for a departmental audit to identify the same issue. Whether to proactively correct, and how, is a case-specific judgment call that depends on the materiality of the amount, the strength of the original position, and the practical risk of the issue surfacing independently.

Often, yes. Related-party status under GST law (and therefore Rule 28 valuation obligations, and the distinct-person test for cross-border export claims) depends on the actual ownership and control relationships between entities. A new subsidiary, a change in shareholding that creates or removes a related-party relationship, or a new group entity entering into existing intercompany arrangements can all change the GST analysis for transactions that were previously structured correctly under the old group structure.

If a transaction is later reclassified by the department — for example, a slump sale reclassified as a taxable asset sale, or an export reclassified as a domestic supply — the consequences typically include: GST demand on the full transaction value (which can be very large relative to the margin on the deal), interest on the demand from the original due date, and penalty that can range from a percentage of the tax to, in cases involving suppression or fraud allegations, a penalty equal to the tax amount itself. Beyond the direct financial exposure, an unresolved structuring dispute can also affect due diligence in a subsequent funding round or sale of the business.

For a reasonably contained transaction — a single business transfer, a defined intercompany arrangement, a specific new contract structure — a structuring memo can typically be delivered in 2 to 4 weeks from the initial briefing, assuming documents and group information are made available promptly. More complex, multi-entity, or cross-border transactions, or those requiring an advance ruling, take longer. Time-sensitive transactions with an external deadline (a signing date, an NCLT scheme timeline) are prioritised and can often be compressed with focused engagement from both sides.

Both. Correct structuring is fundamentally about achieving the accurate legal position — but within the range of legitimate, defensible alternatives that the law and facts genuinely permit, there is often a structure that is more tax-efficient than another (for example, structuring a business transfer to genuinely qualify as an exempt going-concern transfer versus an itemised sale that attracts full GST, where the underlying facts support either characterisation). We do not recommend aggressive positions with no factual basis, but we do actively look for the legitimate structure that best serves the commercial and tax outcome the client needs.

Yes. We regularly review structuring positions taken by another advisor, an in-house tax team, or counsel from the other side of a transaction, and provide an independent assessment — particularly useful before a large or unusual transaction is finalised, or when a board or investor wants an additional layer of comfort on the tax position before signing off.

The Harmonised System of Nomenclature (HSN) code for goods and the Services Accounting Code (SAC) for services determine, among other things, the applicable GST rate and the level of detail required in your invoices and returns. In a structured transaction, the correct HSN/SAC classification is not a clerical afterthought — it is the practical expression of the classification analysis done during structuring. An incorrect code can trigger an automated mismatch flag in GSTN's systems, invite a query, or apply the wrong rate outright.

The 40% slab applies to a narrow, specifically notified list of goods generally categorised as luxury or 'sin' items (such as certain tobacco products, aerated beverages, and specified luxury goods) — it is not a general-purpose rate that applies to ordinary business transactions, services, or intercompany arrangements. For the overwhelming majority of transaction structuring engagements — business transfers, services, intercompany fees, standard goods — the relevant rates are 5% or 18% depending on classification. We confirm the applicable slab against the current notified list at the time of each engagement rather than assuming based on a prior rate schedule.

Advance rulings are issued by state-level AARs and are technically binding only within that jurisdiction and on that specific applicant and transaction — a ruling obtained in one state does not automatically bind the tax authorities of another state, even for a similar fact pattern, though it can be persuasive. For a business with multi-state operations and a recurring transaction type, this means the practical value of a single AAR application should be weighed against the possibility that the same question could, in principle, receive a different ruling in another state.

GST law changes frequently — through GST Council recommendations, CBIC notifications and circulars, and evolving judicial and AAR precedent. Our GST advisory team tracks these changes on an ongoing basis as part of the practice, and every structuring engagement is benchmarked against the current law and notifications applicable at the time of the transaction — not against a static reference from an earlier engagement.

Real estate transactions have their own specific GST valuation and timing rules that differ from general goods/services structuring — including specific notifications governing the developer's GST liability on the landowner's share of construction under a Joint Development Agreement, and the distinction between a taxable under-construction sale versus a GST-exempt sale of a completed property (post-completion certificate). These rules interact closely with stamp duty and RERA considerations, so real estate structuring typically benefits from coordinated GST, corporate law, and RERA advisory rather than a GST-only review.

GST structuring is one component of a broader India-entry exercise that also includes FEMA/FDI compliance, corporate structuring (share purchase vs. asset purchase vs. new entity), income-tax due diligence, and — where relevant — RBI reporting. We coordinate the GST analysis for the transaction itself (classification of the deal, treatment of any asset transfer, ongoing GST registration and compliance for the post-transaction entity) as part of the same engagement as the broader India-entry advisory, so the tax and structuring workstreams move together rather than in silos.