TMI BlogITC reversal on re - workX X X X Extracts X X X X X X X X Extracts X X X X ..... 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? - Reply By Amit Agrawal - The Reply = No reversal of ITC is required against repairs done duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the warranty period. Please refer to Circular No. 195/07/2023-GST dated 17th July, 2023 . These are ex facie views of mine and the same should not be construed as professional advice / suggestion. - Reply By KASTURI SETHI - The Reply = Dear Sir, No reversal is required.. - Reply By KASTURI SETHI - The Reply = Extract of FAQ Question 20 : What would be the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax liability on replacement of parts (no consideration is charged from a customer) under a warranty and whether the supplier is required to reverse the input tax credit? Answer : As parts are provided to the customer without a consideration under warranty, no GST is chargeable on such replacement. The value of supply made earlier includes the charges to be incurred during the warranty period. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, the supplier who has undertaken the warranty replacement is not required to reverse the input tax credit on the parts/components replaced - Reply By KASTURI SETHI - The Reply = Just for knowledge sake in changed scenario during warranty period. Question 21 : An Original Equipment Manufacturer (OEM) has an obligation to provide repair services to their customers in the warra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nty period. This activity is outsourced by OEM to D , who bills the OEM for the services he provides to the customer. What is the tax liability of D ? Answer : D is providing service to the OEM. GST is payable on the value of any supplies made by D to OEM i.e. in respect of bills raised by D on the OEM - Reply By Ganeshan Kalyani - The Reply = Circular clarifies the doubt. - R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eply By Padmanathan Kollengode - The Reply = Agreed with Experts. This is specifically covered under the recent Circular which states that the cost of re-work/repair during warranty period is included in the price of the product and hence, it is not actually without consideration. - Reply By GUNASEKARAN K - The Reply = Agree with Experts views; Replacement Warranties: A replacement warra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nty is an assurance provided by the supplier at the time of supply to replace the product post-supply in a specified time. Further, no separate charge is recovered from the customer at the point of supply, as such costs are generally included in the product s price. Warranties for Repair: In such a case, the supplier undertakes to repair the defects found in the product. He may or may not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charge additional consideration/ payment. Extended Warranty: An extended warranty is a prolonged warranty offered to consumers in addition to the standard warranty. It is usually an extension of the period of the manufacturer s warranty provided at the time of supply of goods for consideration. Implications of GST On Warranty Replacements / Repair Input tax credit on input and inp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut services used to provide warranty services is available to the supplier. The price of warranty services is inbuilt in the supply price of the product; therefore, such warranty services have suffered output tax. Thus, you are eligible to claim an input tax credit against such services. - Reply By Kaustubh Karandikar - The Reply = Thanks all the experts for your kind and valuable advice. - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Reply By Shilpi Jain - The Reply = Recent circular has cleared doubts regarding this issue. Credit would be eligible. - ITC reversal on re - work - Query Started By: - Kaustubh Karandikar Dated:- 7-8-2023 Goods and Services Tax - GST - Got 9 Replies - GST - Discussion Forum - Knowledge Sharing, reply post by an expert, personal opinion Tax Management India - taxmanagementindia - taxmanagemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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