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.

[Amit Agrawal]

The facts and context of legal issue involved, are not clear from the query raised. Kindly elaborate, in particular, the followings:

A. Is ownership of concerned tools is transferred to foreign customer or not? OR it is merely reimbursement of cost, without making any supply?

B. If concerned tools is physically taken outside India or not?

C. What is purpose if same is kept with the supplier itself in India? Whether, tools are kept with the supplier so as manufacture mould/s (which in turn to be supplied to the foreign customer)?

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.