GST on warranty replacement: no tax where replacements are free as included in original supply; extra charges taxable. Replacement parts and repair services provided free during a warranty period are treated as included in the value of the original supply and are not subject to additional GST; additional consideration charged at replacement/repair is taxable. Manufacturers need not reverse ITC for warranty replacements provided free. Where distributors charge manufacturers for parts or repair services, those supplies are taxable and the manufacturer may claim ITC; if manufacturers supply parts to distributors free for warranty replacement, no GST or ITC reversal arises. Extended warranty is composite if sold with the original supply, otherwise it is a separate taxable contract.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
GST on warranty replacement: no tax where replacements are free as included in original supply; extra charges taxable.
Replacement parts and repair services provided free during a warranty period are treated as included in the value of the original supply and are not subject to additional GST; additional consideration charged at replacement/repair is taxable. Manufacturers need not reverse ITC for warranty replacements provided free. Where distributors charge manufacturers for parts or repair services, those supplies are taxable and the manufacturer may claim ITC; if manufacturers supply parts to distributors free for warranty replacement, no GST or ITC reversal arises. Extended warranty is composite if sold with the original supply, otherwise it is a separate taxable contract.
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