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?

AI Summary

GST Not Applicable on Liquidated Damages for Late Delivery of Imported Goods, Says Participant Referencing Circular No. 178/10/2022-GST A query was raised regarding the applicability of Goods and Services Tax (GST) on liquidated damages recovered by XYZ Ltd. from an international supplier due to late delivery of imported goods. The question referenced Circular No. 178/10/2022-GST dated August 3, 2022, seeking clarification on whether GST should be applied. The response provided by a participant indicated that, in their opinion, GST is not applicable to such liquidated damages.