50th Council Meet: No GST on Parts and Repairing Services Under Warranty

The GST Council convened at Vigyan Bhawan in New Delhi on 11th July 2023 under the chairmanship of Nirmala Sithraman, which included Sanjay Malhotra, Revenue Secretary, and Vivek Johri, chairman of the CBIC.

As per the 50th GST Council meeting press release, a notification will be released to give clarification on various issues concerning GST liability as well as the liability to reverse input tax credit. In this, cases of warranty of replacement of parts and repair services during the warranty period without any consideration from the customers will be mentioned.

The statement also made inter alia that the manufacturer shall not charge GST on such replacement of parts and/or repair service and also, no ITC reversal is required to be made by the particular manufacturer.

The GST Council cleared that manufacturers can’t charge tax on replacement parts or service repairs. Hence, there is no need for manufacturers to make a reverse ITC on the same.

The concerns with refunds under the Goods and Services Tax were also clarified by the finance minister. The refund of accumulated input tax credit U/S 54(3) of the CGST Act, 2017 for a tax period will be limited to GST ITC on inward supplies reflected in GSTR-2B of the said tax period or any prior tax period as a result of the amendment to rule 36(4) of the CGST Rules 2017 with effect from January 1, 2022.

The GST Council has reduced GST on four items that are-

• Uncooked, unfried snacks- GST reduced from 18% to 5%
• Imitation Zari threads- GST reduced from 12% to 5% and
• LD Slag- GST reduced from 18% to 5%.