TMI BlogGST applicability on settlement priceX X X X Extracts X X X X X X X X Extracts X X X X ..... Sir, i have booked contract for sale of wheat (exempt from GST) ₹ 100 in which my profit margin is ₹ 15. Now, buyer asked me that he is not willing to buy wheat, although he paid me ₹ 15 my profit margin. Now, whether I am liable to charge GST on ₹ 15 while raising invoice to buyer. Suppose the above example is for taxable item, then what will be situation ? - Reply By ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ganeshan Kalyani - The Reply = Settlement amount is collect to compensate your loss. You are tolerating an act of your buyer from not purchasing the goods. Tolerating an act is a supply of service and GST @18% is applicable. Tolerating an act is a separate supply, so taxability of goods is not applicable to this. - Reply By KARAN VERMA - The Reply = Thank you Sir. Now, let/s see situation-2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I had made an agreement with buyer that we fix certain price for wheat today and in future if price of wheat increase, you will pay me difference amount and if price in future decrease, I will pay you difference amount without actual delivery of goods. Now, at present the price increase and I have to receive difference money. Whether I am required to raise tax invoice with 18% GST. - Reply By G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aneshan Kalyani - The Reply = There is a provision for credit note and debit note in GST. If the price of the goods was charged more then thru credit note the adjustment is allowed. And, if the price was charged less then thru debit note the differential value of the goods can be charged. - Reply By KASTURI SETHI - The Reply = Nature of supply of service has changed. The amount of ₹ 15/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (whatever you may call), is a consideration against taxable supply of service i.e. tolerating an act. It is in no way commission on account of sale of wheat (exempt supply). I fully support the views of Sh.Ganeshan Kalyani Ji. - Reply By KARAN VERMA - The Reply = A forward contract is an agreement , executed, to purchase or sell a predetermined amount of a commodity or currency at a pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-determined future date at a pre-determined price. The settlement could be by way of actual delivery of underlying commodity/ currency or by way of net settlement of differential of the forward rate over the prevailing market rate on the settlement date. Where the settlement takes place by way of actual delivery of underlying commodity currency, then such forward contracts would be treated a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s normal supply of goods and liable to GST. Where the settlement takes place by way of net settlement of differential of the forward rate over the Act, 2017, future contracts are not chargeable to GST. - Reply By KASTURI SETHI - The Reply = Dear Querist, You have deviated from the original query. It is your prerogative to agree or not. All the experts in this forum always gu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide in the interest of the querist irrespective of the aspect whether it is anti-revenue or pro-revenue. - GST applicability on settlement price - Query Started By: - KARAN VERMA Dated:- 13-8-2020 Goods and Services Tax - GST - Got 6 Replies - GST - Discussion Forum - Knowledge Sharing, reply post by an expert, personal opinion Tax Management India - taxmanagementindia - taxmanagement - taxman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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