Introduce indemnity clauses with suppliers on tax compliance: Expert

Begin by examining if your contract price is tax extra or inclusive of taxes, writes Bhattacharjee

A lot has been written about various aspects of transitioning to GST, but sparse little about contractual caution points. Businesses may refer to the following key aspects in this regard and then negotiate/enter into suitable contracts, capturing the requisite amendments:

1) ‘Change in law’

• Begin by examining if your contract price is ‘tax extra’ or ‘inclusive of taxes’

• If it is tax-inclusive, please examine if your ‘change-in-law-clause’ enables tracking the impact of this change across the supply chain? Simply put, if your service provider claims that the tax rate has gone up from 15 per cent service tax to 18 per cent