Free warranty replacements.

[Asked by Guest]

1.Reversal of ITC inrespect of supply of repair services or defective parts under warranty period at free of cost?

2.As per FAQ'S issued by the CBIC, there is no need to reverse ITC if the value for such services or replacement of defective parts includes in initial sale of product?

3.But under Section 31(3)d, the receipt voucher has to be issued separately if payment is received for future supply of goods or services?

4.Suppose, the consideration for supply of warranty services is included in the initial sale of the product but in future, situation is not raised for any supply of warranty services.In such a case, what we have to do?

Kindly enlighten me on above issues.

AI Summary

GST treatment of warranty inclusions: no ITC reversal when free warranty supplies are included and taxed in the original sale.
Where warranty supplies are contractually included and taxed in the initial sale, subsequent free replacements or repair services during the warranty period are treated as part of the original supply; no additional GST arises and no reversal of input tax credit is required. If consideration for warranty is reflected and taxed in the original tax invoice, contributors view that separate advance receipt documentation under section 31(3)(d) was not applied in the forum and the absence of an actual warranty event does not require adjustment of tax already paid on the inclusive sale.