We have received arbitration award of Rs 50 lakh from vendor for breach of condition of contract which includes 5 lakh interest. Whether GST to be paid if yes then on 50 lakh or 45 lakh.
Nitin Asked question October 31, 2020
In our view consideration received incidental to a breach of agreement/law cannot be said to be related to a supply as such breach of agreement / law does not constitute a supply on its own. However the matter would be litigative as in various advance rulings it has been held that liquidated damages received are subject to GST it being toleration of an ACt.
Further as interest is also connected to the main amount it shall also be subject to same treatment.
Team Clearmytax.in
Frah Saeed Changed status to publish November 1, 2020