Example

ABC Ltd. provides Consultancy Services to Mr B for Rs 10000 and invoice was also raised for the same. but later on it charged Rs 1500 as late fee for delay in payment of consideration on part of Mr B. Whether such late fee will form part of value of services for the purpose of GST?

Answer

Section 15(2)(d) of CGST act specifies that interest or late fee or penalty for delayed payment of any consideration for any supply shall form part of value of services. Thus the late fee charged by ABC Ltd. shall form part of value of supply, thus GST would be chargeable on Rs. 10000+ Rs. 1500 = Rs. 11500.
According to Sec 34, where a tax invoice has been issued for supply of any goods or services or both and the taxable value or tax charged in that tax invoice is found to be less than the taxable value or tax payable in respect of such supply, the registered person, who has supplied such goods or services or both, shall issue to the recipient a debit note containing such particulars as may be prescribed. Accordingly, supplier would issue a debit note to the buyer in this case for Rs. 1500 + tax as applicable.