GST on warranty & free service coupons

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It is a common practice in auto industry to give free service coupons at the time of vehicle sale. Servicing is done by dealers who gets reimbursement of this servicing amount from automobile company i.e. say Maruti or Bajaj. How GST will be applied on this transaction? Free service includes specified activities which dealer is supposed to carry out depending upon the count of free service. Activities include not only service, but replacement of few parts as well. Whether​ dealer will have to treat this transaction as intra-state or inter-state? Same is the query for warranty payments done by auto companies to dealers. Dealers do not charge anything to end consumers. They charge full amount from OEMs.
Replies (4)

Free Service Coupon vouchers:

These coupons will be issued at the time of sale of the vehicle. As per the time of supply rule, GST on such coupons needs to be paid immediately on the date of issue of such vouchers. As per the policy of some manufacturers, the amounts in respect of such coupons will be redeemed to the dealers only once the customer brings the vehicle for repair to the workshop. Therefore, dealers would have to pay tax on such coupons immediately on its issue but the said taxes can be collected from the automobile manufacturers only when the vehicle comes for the repair leading to unnecessary blocking of funds in taxes. 

source: https://www.alankitgst.com/pdf/Automobile.pdf

 

 

 

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