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Gst applicability on transfer of material development cost

278 views 7 replies

Akansha jain

156 Points Joined February 2014

Company A has assigned a task of formulating a special chemical to Company B. In this process ,company B has incurred huge expenses but was not successful in developing the final output. Now Company B wants to transfer the cost incurred during this process to Company A. Will GST be applicable on this transfer on total amount of cost incurred?

Replies (7)

RAJA P M

"Do the Right Thing...!!!"

128116 Points Joined January 2015

Is there Company A accept the charges...?

Akansha jain

156 Points Joined February 2014

Yes, expenses are being transferred by mutual consent

RAJA P M

"Do the Right Thing...!!!"

128116 Points Joined January 2015

Then, You can transfer the cost with GST.

Yes, Total cost or actual cost like materials or Materials with Labour cost and anything...

Akansha jain

156 Points Joined February 2014

So, Gst will be applicable on transfer by Company B to A?

RAJA P M

"Do the Right Thing...!!!"

128116 Points Joined January 2015

Yes, Definitely.

All charges (materials and services) you received (or applied) with GST or without GST will transfer as per mutual understanding then these all transfers levied with GST.

Suresh Kumar

Account

408 Points Joined July 2022

Please clarify.....How's transaction is going on??

If Company A transfers the total cost amount to Company B as Compensation than I think GST will not be applicable on transaction made by Company A to B.

For more clarity...please refer circular no Circular No. 1 7 8../1 0../ 20 2 2..-GST dated 03.08.2022 (attached).

Please correct me, if I am wrong