Liquidated damages for breach of contract are taxable under GST as a service. Compensation for tolerating non-performance is also subject to GST.
Case-Laws
GST
The Advance Ruling Authority determined that the levy of GST on liquidated damages constitutes a supply of service under the Central Goods and Services Tax Act. Liquidated damages received for breach of contract or non-performance are considered income and fall under the definition of consideration for tolerating an act, thereby
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