Liquidated damage payable by foreign exporter

Conventionally, LD amount gets adjusted thru invoice netting off or a separate remittance.

My query is

BOE gives a declaration about true price

LD amt thru banking channel stays unreglected in BoE, so Customs Dept is not aware though they get higher revenue

 

But our declaration about real price in BoE is diluted.

My feeling.. to be adjusted in exporter vendor's invoice itself, so that as Importer wr are protected and do not pay gst on LD on reverse charge method.

Kindly guide.

Replies (1)
  • Customs: Adjusting the LD directly within the vendor's commercial invoice before import is the best approach. It ensures your Bill of Entry reflects the true transaction value and prevents you from overpaying customs duty.

  • GST RCM: You do not need to pay GST under Reverse Charge on Liquidated Damages. Per CBIC Circular No. ______. LD is a compensation for breach of contract, not a taxable supply of service.

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