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Is GST applicable on Liquidated Damage

Roshni jaiswal (student) (51 Points)

25 March 2021

Is GST applicable on Liquidated Damage or not?

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CA. Sourav Sarkar (Chartered Accountant ) (24578 Points)
Replied 25 March 2021

As per Schedule II of CGST Act, 2017, there are some activities which are to be
treated as supply of goods or supply of services. Liquidated damages are covered under the
Clause S(e) of said Schedule II and are to be treated as Services. There is no specific
Service Accounting Code (SAC) for liquidated damages. It may be covered under Heading
"9997" [please refer Central Tax (Rate) Notification no.11/2017 dated 28.06.2017] on which
GST is payable @ 18%.