Payment of Service Tax on Liquidating damages received - reg.
We are paying amount against Liquidated Damages. Kindly let us know the following :-
- Whether we have to pay Service Tax @ 12.36% on the amount received from 01.07.2012
- Whether we have to raised Invoice in the name of the party to collect amount with Service Tax
Regards,
VINAY
Debate on Service Tax Applicability to Liquidated Damages: Compensatory or Taxable Under Finance Act 2012? A discussion on whether service tax applies to liquidated damages received, initiated by a party on July 14, 2012, received four replies. One respondent argued that liquidated damages are compensatory, not taxable services, thus exempt from service tax. Another mentioned a seminar where it was suggested that such damages might be taxable from July 1, 2012. A third respondent referenced the Finance Act 2012, suggesting that obligations under contracts might be taxable. The final reply indicated that service tax applicability depends on whether damages are linked to service provision or unforeseen actions. (AI Summary)
Service Tax
TaxTMI 
TaxTMI 
