GST on forfeited amount of security deposit
This query is : Resolved
29 December 2021
Dear Sir/Madam,
Could you please educate me 'Whether the forfeited amount of security deposit would attract GST'?....
Thank you
Could you please educate me 'Whether the forfeited amount of security deposit would attract GST'?....
Thank you
29 December 2021
No GST as it will not fall under supply.
Message likes :
1 times
30 December 2021
Thanks a lot for the support and time Sir...
30 December 2021
Sorry for the earlier reply.
GST applicable on such forfeiture.
“As per Section 7(1) of the CGST Act, 2017, activities referred to in Schedule II are covered under the scope of supply of goods and service. Clause 5(e) to Schedule II to CGST Act 2017, declares that ‘agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act’ shall be treated as supply of service. The amount, which was received and forfeited by the applicant, was a part of the terms and condition of an agreement held between the applicant and customer. This means that while entering into the agreement, Customer was well aware about the terms and condition of the contract that in absence of breach of agreement or non- fulfillment of terms and condition of payment as per the contract, the amount given as an advance would become forfeited by the applicant being settlement of exit of the contract,” the AAR said.
The AAR said that the amount forfeited/ received by the applicant is covered under supply of service as per clause 5(e) of Schedule II of CGST Act, 2017 and therefore, liable to GST.
GST applicable on such forfeiture.
“As per Section 7(1) of the CGST Act, 2017, activities referred to in Schedule II are covered under the scope of supply of goods and service. Clause 5(e) to Schedule II to CGST Act 2017, declares that ‘agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act’ shall be treated as supply of service. The amount, which was received and forfeited by the applicant, was a part of the terms and condition of an agreement held between the applicant and customer. This means that while entering into the agreement, Customer was well aware about the terms and condition of the contract that in absence of breach of agreement or non- fulfillment of terms and condition of payment as per the contract, the amount given as an advance would become forfeited by the applicant being settlement of exit of the contract,” the AAR said.
The AAR said that the amount forfeited/ received by the applicant is covered under supply of service as per clause 5(e) of Schedule II of CGST Act, 2017 and therefore, liable to GST.
31 December 2021
Forfeiture of security deposit is generally against supplies for which consideration was not received. Forfeiture will render the deposit becoming consideration. GST applicable.
Message likes :
1 times
01 January 2022
Okay...Thanks a lot for the information and support....
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Tax on Deemed Capital Gain
- Regarding ITR filing with more value than showing in AIS/TIS
- Exiting partner in partnership firm in gst portal
- Type of Capital Gain
- F & O PROFIT REPORTING FOR AY 2026-27
- ITR-3 File/Error Found
- ASMT-10 received from A O
- Difference in GSTR3B system generated which is correct and actual Payment it asks
- GST ON TRAVELLING BILLS
- Average Cost Of High Quality Diamonds
- Due Date Clarity
- Can a single LLP in India legally operate multiple unrelated businesses (Travel, Cloud Kitchen, Ecom
- Housing Society-ITR5
- TDS on Rent received on redevelopment of building
- Indian IT Portal issue in computing tax as per UK-India DTAA
- Capital Gains on sale of residential flat
- Upload Level ValidationITR3Category of Defect B/D
- PF Taxable Income
- Clarification on Tax Audit Applicability and Reporting of F&O Transactions in ITR-3
- Interest credited in FY2025-2026 & TDS therein by EPFO does not reflect in AIS or Form 26AS
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
