Recovery of tooling cost

[Textron India]

Dear Sir / Madam

Tool is developed in India to build mould and the moulds are supplied to foreign customer for next 5 to 10 years. if the supplier wants to recover the tooling cost does it attract GST? please note it is cost-to-cost reimbursement.

AI Summary

Indian Company Seeks GST Ruling on Tooling Cost Reimbursement for Long-Term Foreign Supply Contracts: Ownership and Location Key Factors A company in India developed tools to build molds, which are supplied to a foreign customer over a period of 5 to 10 years. The company seeks to recover the tooling cost and inquires if this reimbursement attracts GST. The response highlights the need for clarification on whether the ownership of the tools is transferred to the foreign customer, if the tools are physically taken outside India, and the purpose of retaining the tools with the supplier. These factors are crucial in determining the applicability of GST on the cost-to-cost reimbursement.