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Do I need to collect or pay gst for reward based crowdfunding?

Arthur Lovian (7 Points)

03 November 2021

Hi everyone,

Is there any tax I need to pay as GST if I conduct reward based crowdfunding?

And Is there Income tax on crowdfunded amount?

Purpose is to raise funds for converting Business Idea to reality.

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5 Replies

CA Raj Doshi (Practising CA) (8924 Points)
Replied 04 November 2021

Dear Arthur, In a reward based crowdfunding, there is no sale of goods or rendering of services but consideration is received. Ideally, GST cannot be levied.

However, it is income from income tax point of view. Accordingly, the same shall be chargeable to income based of capital receipt or revenue receipt depending on the object of the crowdfund.

Regards
CA. Raj Doshi

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CA Raj Doshi (Practising CA) (8924 Points)
Replied 04 November 2021

I mean there is sale of goods or rendering of services however not for any consideration.

Janak Shah (ca) (603 Points)
Replied 04 November 2021

GST will be payable as the Reward you're offering will be considered as supply under GST against the amount received from crowd funding.

CA Raj Doshi (Practising CA) (8924 Points)
Replied 04 November 2021

Yes. It's a bit complicated and would depend on understanding your case in detail. An aggressive approach would be " Not liable for GST " and a conservative approach could be " Liable for GST ". The conclusion would arrive only then.