Taxes on warranty services & annual maintenance contract

[Akhilesh Yadav]

Hi, What will be tax applicable on warranty services provided on any product? What will be tax applicable on annual maintenance contract (AMC)?

[YAGAY andSUN]

On the AMC contracts, VAT/CST (as the case may be) will be applicable.  Further, AMC Contract will also attract Service Tax on the Services Portion only ,if , the proper records are maintained accordingly.

If the warranty services are free of cost, then, service tax will not be applicable otherwise it is applicable.

 

AI Summary

Service tax on warranty services applies when charges are levied; AMC attracts VAT/CST and service tax on service portion. VAT/CST applies to AMCs where a sale component exists, and AMCs may attract Service Tax on the services portion if proper records segregating that portion are maintained. Warranty services provided free of charge are not subject to Service Tax, but warranty services for consideration are taxable as a service.