Clarification on availability of input tax credit as per clause (b) of sub-section (2) of section 16 of the Central Goods and Services Tax Act, 2017 in respect of goods which have been delivered by the supplier at his place of business under Ex-Works Contract

Input Tax Credit Allowed for EXW Contracts When Goods Received at OEM Factory Gate under GST Act 2017.

The circular clarifies the availability of input tax credit (ITC) under the Central Goods and Services Tax Act, 2017, specifically for goods delivered under Ex-Works (EXW) contracts. It addresses concerns from the automobile sector where dealers receive goods at the factory gate of Original Equipment Manufacturers (OEMs). The circular states that ITC can be claimed when goods are handed over to the transporter at the OEM's factory gate, as this constitutes 'receipt' of goods under the Act. This applies to all EXW contracts where property in goods transfers at the supplier's location. ITC is contingent on goods being used for business purposes and not diverted or lost.