The term ‘Related Person’ has been defined in Explanation to Section-15 of CGST Act, 2017. As per the said explanation, the persons including legal persons shall be deemed to be ‘related person’ if:-
(1) Such persons are directors or officers of one another’s business
(2) Such persons are legally recognized partners in the business
(3) Such persons are employer and employee
(4) One of them directly or indirectly controls the other
(5) A third person directly or indirectly controls both of them
(6) Both of them together directly or indirectly control a third person
(7) Any person directly or indirectly owns/controls/holds 25% or more of the outstanding voting stock or shares of both of them
(8) They are members of the same family
‘Family’ has been defined under section 2(49) of CGST Act, 2017 as below:-
Family means:-
(a) The spouse and children of the person, and
(b) The parents, grand-parents, brothers and sisters of the person if they are wholly or mainly dependent on the said person
Sole Agents deemed as related persons:- Persons who are associated in the business of one another in which, one is the sole agent or sole distributor or sole concessionaire, howsoever described, of the other, shall be deemed to be related.
