GST on liquidated damages

[Kaustubh Karandikar]

Amount recovered by XYZ Ltd. (India) from a supplier outside India towards ‘Liquidated Damages’ for late delivery of imported goods. Whether XYZ is liable to pay GST on it considering the clarification given in the Circular No. 178/10/2022-GST dt. 3.08.2022?

[Ganeshan Kalyani]

In my view, GST is not applicable.

AI Summary

GST on liquidated damages: recoveries from overseas suppliers for delayed imported goods treated as not subject to GST per advisory. Whether GST applies to amounts recovered by an Indian recipient from a foreign supplier as liquidated damages for late delivery of imported goods is addressed; the expert reply states such recoveries are not subject to GST under the referenced clarification.