TaxTMI 
TaxTMI 
Clarification on availability of ITC in respect of warranty replacement of parts and repair services during warranty period
X X X X Extracts X X X X
X X X X Extracts X X X X
....overnment of India, Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes & Customs. ***** In the reference cited, the Central Board of Indirect Taxes & Customs, Department of Revenue, Ministry of Finance, Government of India, New Delhi, has issued Circular No 195/07/2023-GST, dated 17.07.2023 on the recommendations of the GST Council. Hence, following pari-materia circular is issued. 2. Representations have been received by GST Council, from trade and industry that as a common trade practice, the original equipment manufacturers /suppliers offer warranty for the goods / services supplied by them. During the warranty period, replacement goods /services are supplied to customers free of charge and as such no se....
X X X X Extracts X X X X
X X X X Extracts X X X X
....epair services to be incurred during the warranty period, on which tax would have already been paid at the time of original supply of goods. As such, where the manufacturer provides replacement of parts and/ or repair services to the customer during the warranty period, without separately charging any consideration at the time of such replacement/ repair services, no further GST is chargeable on such replacement of parts and/ or repair service during warranty period. However, if any additional consideration is charged by the manufacturer from the customer, either for replacement of any part or for any service, then GST will be payable on such supply with respect to such additional consideration. 2. Whether in such cases, the man....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... parts and/ or repair services to the customer. However, if any additional consideration is charged by the distributor from the customer, either for replacement of any part or for any service, then GST will be payable on such supply with respect to such additional consideration. 4. In the above scenario where the distributor provides replacement of parts to the customer as part of warranty on behalf of the manufacturer, whether any supply is involved between the distributor and the manufacturer and whether the distributor would be required to reverse the input tax credit in respect of such replacement of parts? (a) There may be cases where the distributor replaces the part(s) to the customer under warranty either by using his st....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ct to provisions of sub-section (2) of section 34 of the TNGST Act. Accordingly, the tax liability may be adjusted by the manufacturer, subject to the condition that the said distributor has reversed the ITC availed against the parts so replaced. 5. Where the distributor provides repair service, in addition to replacement of parts or otherwise, to the customer without any consideration, as part of warranty, on behalf of the manufacturer but charges the manufacturer for such repair services either by way of issue of tax invoice or a debit note, whether GST would be payable on such activity by the distributor? In such scenario, there is a supply of service by the distributor and the manufacturer is the recipient of such supply of rep....