Update on recent Circulars issued by CBIC
Taxability of transactions involving liquidated damages, contractual payments, penalties, etc., has always been a bone of contention with the tax authorities. With an intent to settle the ongoing controversies in this regard, Central Board of Indirect Taxes and Customs (“CBIC”) has clarified the ambit of the entry 5(e) of Schedule II to the Central Goods and Services Tax Act, 2017 – “agreeing to an obligation to refrain from an act or to tolerate an act or a situation, or to do an act”. This prism highlights the key principles laid down in determining taxability of such transactions.
This prism also covers other circulars issued in respect to rates applicable to supply of certain goods and services.
For further details, please refer to the below document.
