TaxTMI 
TaxTMI 
During the period 2019 - 20, Re – Work carried out on goods received back from the Customers and after re – work it was sent back to customers under a Delivery Challan without payment of GST as it was within the warranty period. Whether proportionate input tax credit is required to be reversed on this?
ITC reversal on re - work
07 Aug 2023 
9 Replies 
1642 Views Asked by
Warranty repair and replacement do not require reversal of input tax credit when costs are inbuilt in the product price.
Re-work or replacement of parts performed during the warranty period and supplied without separate consideration are treated as covered by the original product price; therefore the supplier need not reverse input tax credit on inputs or input services used for warranty activities, and remains eligible to claim such credits. If repairs are outsourced, the service provider must pay GST on services billed to the OEM. (AI Summary)
Re-work or replacement of parts performed during the warranty period and supplied without separate consideration are treated as covered by the original product price; therefore the supplier need not reverse input tax credit on inputs or input services used for warranty activities, and remains eligible to claim such credits. If repairs are outsourced, the service provider must pay GST on services billed to the OEM. (AI Summary)