GST liable on partnership interest and salary if firm paid to partner

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if a person is a working partner and is getting salary then the said salary is neither supply of goods nor supply of service in terms of clause 1 of Schedule III of CGST Act 2017. Further, in case if the person is in receipt of the amount towards his share of profit from the said partnership firm, then also the said income is not under the purview of GST as the share of profit is nothing but an application of money and hence the said salary is not required to be included in the aggregate turnover for registration under the provisions of GST Act.

Interest income on partners fixed capital credited to partner’s capital account and Interest income on partners variable capital credited to partner’s capital account is exempted under Entry No.27(a) of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. 

Refer advance ruling pronounced by AAR  Karnataka in a matter of Anil Kumar Agarwal dated 04.05.2020 [2020] 24 TAXLOK.COM 005 (AAR-Karnataka).