Fund management groups often operate through multiple entities — the fund, the manager, the trustee, and shared service entities. Transactions between these entities trigger GST under the distinct persons and related party provisions. Cross-charge structuring ensures that these transactions are compliant and tax-efficient.
This article explains the cross-charge structuring framework.
The Distinct Persons Principle
Entities under the same PAN with different GSTINs are distinct persons. Transactions between them are supplies.
Cross-Charge vs ISD
- ISD: For distributing ITC on common input services from external vendors. Mandatory from April 2025.
- Cross-Charge: For internally generated services and non-ITC cost allocations.
Rule 28 Valuation
- Where recipient is eligible for full ITC, nil-value invoice is acceptable.
- Where full ITC is not available, open market value applies.
Documentation
- Cost allocation workings.
- Invoices.
- GSTR-6 for ISD.
Conclusion
Multi-entity fund management groups need cross-charge structuring to ensure compliance and tax efficiency. A CA firm with fund expertise ensures that inter-entity transactions are structured correctly.
At Anuj Desai & Associates, we provide GST cross-charge structuring for multi-entity fund management groups. Our team handles ISD, Rule 28 valuation, and documentation.
For a confidential consultation, contact us at office@anujdesaiassociates.com or call 9619456656. Visit our website at https://anujdesaiassociates.com or connect with our founder on LinkedIn at linkedin.com/in/ca-anuj-desai-122547230.