FOC warranty

[Suresh Ramu]

Dear all Pl clarify about FOC Warranty would attract VAT/CST.

AI Summary

Free of Charge Warranties Not Taxed Under VAT/CST; Input Tax Credit Reversal Required for Component Replacements. A discussion on whether Free of Charge (FOC) warranties attract VAT/CST concluded that warranties are considered services, not sales, and thus should not be taxed under VAT/CST. It was noted that if components are replaced under warranty without consideration, Input Tax Credit must be reversed. The applicability of service tax was debated, with some arguing that warranties resemble insurance and attract service tax, while others contended that no service tax is applicable if no service charges are collected. It was highlighted that warranty costs are typically included in the product price, making FOC warranties misleading.