Circular on GST applicability on liquidated damages, compensation and penalty arising out of breach of contract or other provisions of law (dated 03.08.2022)-Ministry of Finance.
View PdfCircular on GST applicability on liquidated damages, compensation and penalty arising out of breach of contract or other provisions of law (dated 03.08.2022)-Ministry of Finance.
- In certain cases/instances, questions have been raised regarding taxability of an activity or transaction as the supply of service of agreeing to the obligation to refrain from an act or to tolerate an act or a situation, or to do an act. Applicability of GST on payments in the nature of liquidated damage, compensation, penalty, cancellation charges, late payment surcharge etc. arising out of breach of contract or otherwise and scope of the entry at para 5 (e) of Schedule II of Central Goods and Services Tax Act, 2017 (hereinafter referred to as, “CGST Act”) in this context has been examined and clarified, refer attachment for further details.
