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Service Tax on Penalty charged

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Chandrakant Patil asked over 2 years ago

If We (Co.) charged the penalty as per PO terms- to vendor for failure to full fill the terms as per Purchase Order/ Agreement, whether the penalty is applicable on it ?, if yes what is the criteria?

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2 Answers
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 veeru answered over 2 years ago

As per my opinion, Service tax should not be applicable on the penalty charges, which you reimburse from the vendor since the same is not towards any taxable service rendered by you.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Aarti Vadnerkar answered over 2 years ago

Dear, As per my opinion, Service tax should not be applicable on the penalty charges, which you reimburse from the vendor since the same is not towards any taxable service rendered by you.

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