Assignment of profits of AIF from fund to Investment Manager, Goods and Services Tax - GST

[Bhavesh Suthar]

A is a sponsor as well as Investment Manager (IM) of AIF (Alternate Investment Fund) upto Aug' 2023. The sponsor is the initial capital contributor and further investments are made by other investors. Profits from redemption of units shall be divided between the sponsor and investors. From Aug' 2023, the IM was changed from A to B (sponsor being unchanged i.e. A). Now 100% profits from redemption of units (carried interest) shall be transferred from the Fund to the new IM i.e. B . B also receives fixed management fees from the Fund irrespective of the performance of the Fund. Will this transfer of profits attract GST, being a return on investment. Since distribution of carried interest is dependent on performance of Fund, can it be construed as 'actionable claim'.