My OPC ( one person company) is planning three coaching centres in three different places namely Raipur , Gaziabad UP & Islampur in Bihar. Each coaching classes will be run by three separate individual entity ( say operating entity) on profit sharing basis with my OPC. We will be out-sourcing/ purchasing study material from certain vendor/company. Initial capital expenditure I/c purchase of requisite equipment like projectors , laptop etc ( Appx Rs 3-5 lakh) has to be done by OPC. What will be efficient taxation wise - receiving tuition fee in name of opc & making expenditure by it . Subsequently sharing profit with operating entity. Or providing loan/ grant to operating entity in lieu of capital expenditure ( Rs 3 lakh or so ) and allow tuition fee collection in name of operating entity. Subsequently sharing profit with operating entity. What type of collaboration will be efficient taxation wise. PS - OPC has still no GST no . This year we are not expecting turnover to exceed by Rs 20 lakh
Hello,
There is no straight jacket answer to your question as the entire business model has to be understood first before taking a call because there is more to it than just GST.
For GST sake, it is better if the operating entity raises invoices and collect fees than the OPC.
Trust this clarifies your query.
Feel free to call / get back in case of further clarifications.
Thanking You.
Regards,
Rohit R Sharma
BCOM, FCA, LLB, CERT. FAFP
Hi,
From the limited facts mentioned above, both kind of collaboration wil give you the same result from income tax perspective.
Please feel free to call/ revert in case you need more clarity
Thanks and regards
Abhishek Dugar
CA CS B.Com
Option 1 is more beneficial. as OPC has GST no, it can claim credit also on the GST portion of input paid
Hi,
It is better if the centre bills in its name and then passes the OPC's share in order to minimise GST.
Trust this clarifies.
Regards,
Keerthiga Padmanabhan
M.Com., CA, LL.B
Hi
In view of taxation perspective, there would not arise many differences in both the options
But, it is advisable to operate through OPC and then share the profits to other entities by way of commissions.
