- The defective parts shall be sent for repair on a delivery challan accompanied by such e-way bill as may be prescribed.
- GST shall be chargeable on the repair amount, including the cost of parts, charged by the repairing centre.
( FAQ 22: IT/ITES)
An Original Equipment Manufacturer (OEM) has an obligation to provide repair services to their customers in the warranty 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’
‘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.
(FAQ 21: IT/ITES)
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.
(FAQ 20: IT/ITES)
What special provisions are attracted in GST with regard to associated enterprises
- An enterprise which participates, either directly or indirectly, through one or more intermediaries, in the management, or control or capital of the other enterprise is an associated enterprise.
- In the context of GST, associated enterprise is particularly relevant in the case of supply of services, where the supplier is located outside India.
- In such cases, the time of supply will be the earlier of date of entry in the books of account of the recipient of supply or the date of payment – thus, within ‘associated enterprises’, the levy under GST is attracted once such book entries are made even if no actual payment takes place or no invoice
is issued.
(FAQ 20: IT/ITES)
When would it be construed that I have made a supply of services involving temporary transfer or permitting the use or enjoyment of any intellectual property right
- Generally, the End User Licence Agreement (EULA) is the legal contract between a software application author or publisher and the user of that application governing the usage.
- The agreement is renewable and/or could be amended from time to time.
- To find out as to whether there is an element of supply involved when software is delivered to its customer, the terms and conditions of EULA are
material. - The contract for supply therefore assumes significance in this test to decide whether or not there has been ‘temporary transfer or permitting the use or enjoyment of any intellectual property right’.
( FAQ18: IT/ITES)
I am obtaining online database access services from a company abroad over the net, would I have to pay tax on reverse charge
- The recipient, if registered, has to pay the applicable IGST on reverse charge basis.
- If the recipient is not registered, the matter is treated as an online information and database access or retrieval service (OIDAR) and the OIDAR service provider is liable to take registration and pay tax.
(FAQ 17: IT/ITES)
I am a whole seller of rice dealing in both branded and un-branded rice. I purchase them locally (i.e. from within the State) and also from outside the State (inter-State purchase). In the last financial year my turnover was Rs 5.5 Crore. Today, I am not registered under VAT.The suppliers of basmati rice (branded) are saying that they will charge 5% IGST and I must get myself registered to avail the ITC. What do I do?
As rice put up in a unit container and bearing a registered brand name is taxable @ 5%, the suppliers of branded basmati rice located in other States would be charging IGST @ 5%, whose credit can be availed only when the recipient is registered under the CGST Act, 2017.Therefore, if you want to avail of input tax credit, you must get yourself registered. That said, for making inter State purchases one is not mandatorily required to be registered.
(FAQ-9 (ii) :Food Processing)
If I supply a laptop bag along with the laptop to my customer, what would be the rate of tax leviable
- If the laptop bag is supplied along with the laptop in the ordinary course of business, the principal supply is that of the laptop and the bag is an ancillary.
- Therefore, it is a composite supply and the rate of tax would that as applicable to the laptop.
(FAQ 16: IT/ITES)
I have a unit in the DTA and another in the SEZ; can I take a common registration
No. A person having unit(s) in a Special Economic Zone as
well as outside the SEZ in a State, shall make a separate application for
registration for SEZ unit(s) as a business vertical distinct from his other
units located outside the Special Economic Zone in that State (Refer
Rule 8(1) of CGST Rules, 2017).
( FAQ 15: IT/ITES)
I have more than one SEZ unit in different States; do I need to take separate registrations? Also, I have two SEZ units in one State. Can I take a single registration
(1) Yes. Under GST, every entity shall take GST registration in each State from which it makes taxable supplies. However, a single registration can be taken for all your SEZ units within a State, whether located in one SEZ or more than one SEZ.
(2) A person having unit(s) in a Special Economic Zone as well as outside the SEZ in a State shall make a separate application for registration for SEZ unit(s) as a business vertical distinct from his other units located outside the Special Economic Zone in that State (Refer Rule 8(1) of CGST Rules, 2017).
(FAQ 14: IT/ITES)