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

Tooling cost reimbursement: GST treatment depends on whether payment is a taxable supply, transfer of ownership, export, or in India use. Taxability of tooling cost recovery depends on whether the payment is a supply or mere reimbursement, determined by transfer of ownership or possession, physical export of the tool, and the purpose or location of its use; clarifications on ownership transfer, export status, and in-India use are requested to assess GST applicability.