Clarification on Input Tax Credit for Ex-Works Contracts in the Automobile Sector
<p><span>The Ministry of Finance, Government of India, issued Circular No. 241/35/2024-GST on December 31, 2024, providing crucial clarifications regarding the availability of input tax credit (ITC) for automobile dealers under Ex-Works (EXW) contracts. This circular addresses the eligibility of ITC when goods are delivered by the supplier at the supplier's place of business.</span></p><h4>Key Highlights:</h4><ol start="1"><li><span><strong>EXW Contracts Explained</strong>: In the automobile sector, EXW contracts between dealers and Original Equipment Manufacturers (OEMs) specify that the property in goods passes to the dealer at the factory gate of the OEM when the goods are handed over to the transporter.</span></li><li><span><strong>Deemed Receipt of Goods</strong>: The circular clarifies that goods delivered to a transporter at the factory gate of the OEM on behalf of the dealer are considered "received" by the dealer for the purposes of claiming ITC, even if the goods are physically received later.</span></li><li><span><strong>Eligibility for ITC</strong>: Dealers can avail ITC on goods billed and handed over at the factory gate, as long as the goods are used or intended to be used in the course of business.</span></li><li><span><strong>Implementation Guidance</strong>: The circular provides guidance for maintaining compliance with the CGST Act and addresses any potential issues in implementing these provisions.</span></li></ol><p><span>This circular ensures uniformity in the application of ITC provisions for the automobile sector, facilitating smoother business operations for dealers and OEMs alike.</span> <a href="https://cms.plasament.com/storage/circular-no-241-2024.pdf">circular-no-241-2024</a><br> </p>