The Government of Tamil Nadu on July 12, 2024, issued a clarification in respect of GST liability and input tax credit (ITC) availability in cases involving Warranty/ Extended Warranty, in furtherance to Commercial Tax Circular No. 11/2023 (PP6-GST/82/2023) dated August 14, 2023, related to the clarification on availability of ITC in respect of warranty replacement of parts and repair services during warranty period.
The following has been stated namely: -
• It clarifies the GST and input tax credit liability for warranty replacements, initially focused on parts shall be extended to cover the replacement of goods themselves under warranty per Commercial Tax Circular No. 11/2023 (PP6-GST/82/2023) dated August 14, 2023, interpreting references to "parts" as inclusive of "goods" where applicable.
• It clarifies that in cases where a distributor replaces goods under warranty from their own stock and later receives replenishment from the manufacturer without charge, then no GST shall be applicable on the replenished goods and no ITC reversal shall be required by the manufacturer.
• It clarifies that the extended warranty sold at the time of original goods supply by a different supplier shall be treated separately for GST, while the post-supply extended warranty shall be considered a distinct service supply with applicable GST.
[Circular No. 10/2024 (PP6/GST-16O/2024)]
