TMI BlogClarification on availability of ITC in respect of warranty replacement of parts and repair services during warranty periodX X X X Extracts X X X X X X X X Extracts X X X X ..... C Central Board of Indirect Taxes and Customs (CBIC) has issued the above referred circular. For the uniformity, it has been decided that the said circular issued by the CBIC is being made applicable, mutatis mutandis , in implementation of the MGST Act, 2017. Copy of the referred CBIC circular is attached herewith. This Trade Circular is clarificatory in nature. Difficulty if any, in the implementation of this Circular be brought to the notice of the office of the Commissioner of State Tax, Maharashtra. (Rajeev Kumar Mital) Commissioner of State Tax, Maharashtra Circular No. 195/07/2023-GST F. No. CBIC-20001/5/2023-GST Government of India Ministry of Finance Department of Revenue Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Act, 2017 (hereinafter referred to as the CGST Act), hereby clarifies as follows: S.No. Issue Clarification 1. There are cases where the original equipment manufacturer offers warranty for the goods supplied by him to the customer and 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. Whether GST would be payable on such replacement of parts or supply of repair services, without any consideration from the customer, as part of warranty? The value of original supply of goods (provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of parts and/ or repair services to the customer during the warranty period, is not required to reverse the input tax credit in respect of the said replacement parts or on the repair services provided. 3. Whether GST would be payable on replacement of parts and/ or repair services provided by a distributor without any consideration from the customer, as part of warranty on behalf of the manufacturer? There may be instances where a distributor of a company provides replacement of parts and/ or repair services to the customer as part of warranty on behalf of the manufacturer and no separate consideration is charged by such distributor in respect of the said replacement and/ or repair serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor is required in respect of the same. (b) There may be cases where the distributor raises a requisition to the manufacturer for the part(s) to be replaced by him under warranty and the manufacturer then provides the said part(s) to the distributor for the purpose of such replacement to the customer as part of warranty. In such a case, where the manufacturer is providing such part(s) to the distributor for replacement to the customer during the warranty period, without separately charging any consideration at the time of such replacement, no GST is payable on such replacement of parts by the manufacturer. Further, no reversal of ITC is required to be made by the manufacturer in respect of the parts so replaced by the distributo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the customers which can be availed at the time of original supply or just before the expiry of the standard warranty period. Whether GST would be payable in both the cases? (a) If a customer enters in to an agreement of extended warranty with the manufacturer at the time of original supply, then the consideration for such extended warranty becomes part of the value of the composite supply, the principal supply being the supply of goods, and GST would be payable accordingly. (b) However, in case where a consumer enters into an agreement of extended warranty at any time after the original supply, then the same is a separate contract and GST would be payable by the service provider, whether manufacturer or the distributo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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