Solved Queries
71 AS I GOT TO KNOW THAT THERE IS SOME KINDA CIRCULAR WHERE IT IS MENTIONED THAT GST ON WARRNTY SHOULD NOT BE PAID BY THE DEALER KINDLY LET ME KNOW, IF YOU HAVE ANY OTHER INFORMATION REGARDING THIS KINDLY LET ME KNOW
Ans. We are made to understand that you have supplied some material or services under warranty as promised at the time of principal sale. Now, you have ambiguity whether GST is applicable to such supplies under warranty?
It is clear that GST is applicable on the supply in lieu of consideration and when the goods or services are supplied under warranty, they are supplied without any consideration. Therefore there is no question of the applicability of GST on supplies under warranty.
There are advance rulings available on this issue. For reference as sought in the matter of South Indian Federation of Fishermen Societies (GST AAR Karnataka) where it was pronounced that as:
- Whether GST leviable on supply of materials and labour charges incurred during the warranty period, free of cost.
Answer: The provision of material and labour during warranty period without consideration (free of cost) does not come under the purview of supply in terms of Section 7 of the CGST Act, 2017 and no GST is leviable in such free of cost replacements/ labour services.
Further also, in sectoral FAQ’s issued by CBIC can be referred as follows:
| S. No. | Question | Answer |
| 1 | What would be the tax 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? | 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. Therefore, the supplier who has undertaken the warranty replacement is not required to reverse the input tax credit on the parts/components replaced. |
| 2 | What is the procedure/documents required for sending free replacement to the customers at free of cost? | Where free replacement is provided to the customers without consideration under warranty, no GST is chargeable on such replacement. In such cases goods may be sent on delivery challan as provided in rule 55 of the CGST Rules, 2017. |
70 Is GST Registration mandatory for Export of Service even if Turnover is less than threshold limit i.e. 20 lakhs ?
Ans. It is mandatory to take GST registration in case the supplier is engaged in Inter-Supply. Supplier includes supplier of goods or service or both.
However, in order to provide relief to small service providers from obtaining the mandatory GST registration, a Notification No.10/2017-Integrated Tax was issued. By virtue of this notification, in case a service provider supplying inter-states services but turnover is below the threshold limit of Rs. 20 lakhs/10 lakhs for specified states, it is not mandatory to take the GST registration.
Therefore, in the given case too, the supplier is engaged in inter state supply of services I.e. export of services, therefore there is no need for mandatory registration.
Q.69 Came to know that latest GST council has suggested for GST on hospital room rent above Rs. 5000, without ITC.
My queries are
1. Pls share notification for the same
2. Without ITC means what, is it for consumer that he cant take credit of ITC on room rent or any thing else.
3. Can an insurer, who ultimately bears that bill, will be able to take credit of this.
Ans. Please find below the replies to your query:
Notification is yet to be issued.
Apparently, Input Tax Credit is available to the registered recipient however it is subject to the provision of Section 16 & 17 of the CGST Act, 2017.
It should be allowed primarily, however clarity can be provided once the detailed notification is issued.
