TaxTMI 
TaxTMI 
Dear all Pl clarify about FOC Warranty would attract VAT/CST.
FOC warranty
27 Nov 2015 
8 Replies 
10146 Views Asked by
Warranty as service: warranty repairs attract service tax while VAT/CST applies only to sale consideration.
FOC warranty repairs and replacements are treated as warranty services, not sales; VAT/CST applies to sale consideration and thus does not tax a warranty provided without separate consideration. If parts or inputs are replaced under warranty, any input tax credit claimed must be reversed where no output VAT is charged. Warranty services resemble insurance-like services and can attract service tax even if no separate charge is collected; contractual terms and embedded pricing affect tax treatment. (AI Summary)
FOC warranty repairs and replacements are treated as warranty services, not sales; VAT/CST applies to sale consideration and thus does not tax a warranty provided without separate consideration. If parts or inputs are replaced under warranty, any input tax credit claimed must be reversed where no output VAT is charged. Warranty services resemble insurance-like services and can attract service tax even if no separate charge is collected; contractual terms and embedded pricing affect tax treatment. (AI Summary)