Liquidated damages received by a service receiver from a service provider for not meeting terms of contract would attract 18 per cent goods and services tax (GST) in certain cases, the authority for advance rulings (AAR) in Andhra Pradesh has ruled.
Liquidated damages are the sum that one party receives when the other party fails to meet provisions of a contract between them.
The ruling was given in an application by Andhra Pradesh Development Company (APPDCL), a special-purpose vehicle set up to implement mega power projects in the state.
Source a2ztaxcorp
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