GST on Repair and Maintenance Services in 2026: Rate, AMC, Parts vs Labour, Warranty and ITC

Repair work is everywhere in Indian business: the car service centre, the mobile repair counter, the lift maintenance contractor, the AC technician, the tractor workshop and the engineering firm that overhauls factory machines. Each of these jobs mixes labour with spare parts, and GST treats the mix in ways that change the rate, the paperwork and whether the customer can claim credit. This guide gives the 2026 rules for GST on repair and maintenance services: the rate and SAC codes, annual maintenance contracts, parts versus labour, free warranty replacements under Circulars 195/2023 and 216/2024, the block on input tax credit for car repairs, and worked examples in rupees. It was checked against the rate notification, CBIC circulars and the CGST Act in October 2026.

Quick answer

Repair and maintenance services are taxed at 18% under heading 9987 (serial 25(ii) of Notification 11/2017-CT(Rate)). Parts and labour shown separately on the bill are taxed at their own rates (Circular 47/21/2018). Free repairs and replacements under warranty carry no GST and need no credit reversal (Circulars 195/07/2023 and 216/10/2024).

• AMCs are maintenance services at 18%; comprehensive AMCs including parts are usually taxed as one supply

• Aircraft and ship MRO is 5%; app-booked plumbing and carpentry by small workers is 5% (no input tax credit), paid by the app

• Businesses cannot claim credit on repairs to cars with up to 13 seats (section 17(5)(ab)), with narrow exceptions

• GST 2.0 on 22 September 2025 cut many goods rates but left repair services at 18%

What counts as repair and maintenance under GST

Heading 9987 of the services classification covers "maintenance, repair and installation (except construction) services". It has three groups: maintenance and repair of fabricated metal products, machinery and equipment (99871), repair of other goods (99872), and installation other than construction (99873). The codes repair businesses use most are:

Repairs to buildings are not in heading 9987. Painting, waterproofing, plumbing renovation or structural repairs to an immovable property are construction or works contract services under heading 9954, with their own rates and credit rules — see our works contract guide. Repairs to goods that a manufacturer carries out as part of a job-work process, such as reconditioning a customer's goods before sale, can fall under heading 9988 instead. The test is whether the job restores something to working order (repair) or transforms someone else's goods (job work).

The rates: 18%, with three exceptions

Serial 25 of Notification 11/2017-Central Tax (Rate) has four items. Item (ii), the general entry, taxes maintenance, repair and installation services at 9% central tax plus 9% state tax: 18%. That covers almost every repair business: vehicle service centres, appliance and electronics repairers, machine and lift maintenance contractors, computer repair, and the neighbourhood mobile shop.

The exceptions are narrow. Items (ia) and (ib) tax maintenance, repair or overhaul of aircraft, aircraft engines and parts, and of ships and other vessels, their engines and parts, at 5%. Item (i) taxes house-keeping services "such as plumbing, carpentering, etc." at 5% (no input tax credit) without credit when supplied through an e-commerce operator by a person not liable to register; under Notification 17/2017-CT(Rate) the operator — the home-services app — pays that tax, not the plumber.

When GST 2.0 took effect on 22 September 2025, the rates of many goods that repairers use fell: two-wheelers up to 350 cc, small cars, televisions and lead-acid batteries moved to 18% from 28%, and tractor parts to 5%. Notification 15/2025-CT(Rate) did not amend serial 25, so labour stayed at 18%. That makes the parts-versus-labour question below more important than it used to be.

Parts and labour on the same bill

A repair job usually involves both goods (spare parts, oil, gas, consumables) and services (diagnosis and labour). GST law offers two ways to tax such a bill.

The first is composite supply. Section 2(30) of the CGST Act defines a composite supply as two or more supplies naturally bundled and supplied together in the ordinary course of business, one of which is the principal supply, and section 8 taxes the whole at the principal supply's rate. A watch repairer that charges ₹600 to fix a watch, including a small spring, is supplying a repair service with a part incidental to it; the whole ₹600 is a service at 18%.

The second is separate supplies. CBIC addressed car servicing directly in Circular 47/21/2018-GST: where a supply involves both goods and services and their values are shown separately, the goods and services "would be liable to tax at the rates as applicable to such goods and services separately". Authorised service centres follow this almost universally: the job card and invoice list each part with its HSN code and rate, and each labour item with SAC 998714 at 18%. The circular also says taxability must be decided case by case on the facts, so a bill that lumps parts and labour into one figure is likely to be taxed as a composite repair service.

For most jobs the rate is the same either way, because the common parts — car parts under HSN 8708 at 18%, motorcycle parts at 18%, phone parts and accessories at 18%, batteries at 18% and tyres at 18% — are all 18%. The difference is real when parts carry a lower rate. Specified tractor parts are 5%, and bicycle tyres are 5%. A tractor workshop that bills parts and labour separately charges 5% on the parts; one that quotes a single price risks 18% on the whole.

Same tractor repair, two ways of billing

Bill	Parts ₹10,000	Labour ₹2,000	Total GST
Parts and labour shown separately	5% = ₹500	18% = ₹360	₹860
One lump sum of ₹12,000 (composite repair)	Included	18% on ₹12,000	₹2,160

Parts and labour shown separately

Parts ₹10,000

5% = ₹500

Labour ₹2,000

18% = ₹360

Total GST

₹860

One lump sum of ₹12,000 (composite repair)

Parts ₹10,000

Included

Labour ₹2,000

18% on ₹12,000

Total GST

₹2,160

Annual maintenance contracts

An annual maintenance contract (AMC) is a promise to keep equipment working for a period — lifts, DG sets, ACs, photocopiers, servers, medical equipment, CNC machines. It is a maintenance service under heading 9987 at 18%, whether or not any breakdown happens during the year.

There are two common types. A non-comprehensive AMC covers preventive visits and labour; parts are billed separately when needed, each at its own rate. A comprehensive AMC covers labour and parts for one fee. Because the parts are supplied only as part of keeping the equipment running, the comprehensive AMC is normally a composite supply with maintenance as the principal supply, and the whole fee is taxed at 18%. The contractor can claim credit on the parts it buys, because they are used in a taxable supply.

Timing matters for AMCs. A contract running more than three months with periodic payments is a continuous supply of services, and under section 31(5) the invoice is due on or before the due date of each payment, even if the work for that period is not yet done. Where the full annual fee is collected upfront, tax is due when the payment is received. A contractor who books AMC income month by month in its accounts but collected it all in April must still pay the tax in April.

Warranty repairs and replacements

Warranty work caused years of disputes: officers argued that free replacements were supplies without consideration, or that manufacturers had to reverse credit on parts given away free. Circular 195/07/2023-GST, issued on 17 July 2023, settled most of this. Its reasoning is that the price of the original product already includes the likely cost of warranty repairs and replacements, and tax was paid on that price at the time of sale. So:

• No GST on free warranty work. When a manufacturer replaces parts or repairs a product during warranty without charging the customer, no further GST is payable. Anything the customer is charged extra — a part not covered, a visit charge — is taxable on that extra amount.
• No credit reversal. Warranty replacements are not exempt supplies, so the manufacturer does not reverse the credit on the parts or the repair services used.
• Dealers and distributors. A dealer that does warranty work for the manufacturer without charging the customer pays no GST on that. If it replaces a part from its own stock and bills the manufacturer for it, or bills the manufacturer for labour, that is a taxable supply to the manufacturer, which can claim credit. If the manufacturer sends the dealer the replacement part free, the manufacturer pays no GST and reverses no credit; if instead the manufacturer issues a credit note for the part, the dealer must reverse its own credit on that part.

Circular 216/10/2024-GST of 26 June 2024 filled two gaps. It confirmed that the same treatment applies when the whole product is replaced under warranty, not just a part, by reading "goods or its parts" wherever the earlier circular said "parts". It also covered dealers who replace goods from their own stock and are then replenished by the manufacturer under a delivery challan without charge: no GST on the replenishment and no credit reversal by the manufacturer.

Extended warranty is treated differently. If the customer buys an extended warranty from the seller at the time of the original sale, its price is part of a composite supply with the goods as the principal supply, taxed at the goods' rate. If it is bought later, or from a different supplier such as the manufacturer or a third-party warranty company, it is a separate supply of services, taxed as a service.

Handling a warranty job as a service centre

1. 1

   Confirm the job is under warranty

   Check the warranty card or manufacturer's portal. Anything outside the cover is a normal taxable repair.

2. 2

   Charge the customer only for extras

   Issue a tax invoice for any amount you collect from the customer; nothing for the covered work.

3. 3

   Decide how the manufacturer settles

   Free replacement part from the manufacturer — no GST either side. Part from your stock billed to the manufacturer — tax invoice at the part's rate. Labour claim to the manufacturer — tax invoice at 18%.

4. 4

   Watch for credit notes

   If the manufacturer issues a credit note for parts you replaced from earlier purchases, reverse the credit you took on those parts.

Input tax credit on repairs: the motor vehicle block

For most businesses, GST paid on repairs and maintenance is fully creditable: a factory claims the 18% on machine repairs and its AMC, a hospital on equipment maintenance to the extent used for taxable supplies, an IT firm on server maintenance.

Motor vehicles are the big exception. Section 17(5)(a) blocks credit on motor vehicles for transporting persons with an approved seating capacity of not more than thirteen, including the driver, unless used for further supply of such vehicles, transporting passengers, or driving training. Clause (ab) extends the block to "services of general insurance, servicing, repair and maintenance in so far as they relate to" those vehicles. Its proviso allows the credit only where the vehicle is used for one of those purposes, or where the service is received by a manufacturer of such vehicles or by an insurer providing general insurance for the vehicles it insures.

In practice:

• A company's sedan used by its directors or sales staff: credit on servicing and repairs is blocked.
• A cab operator's taxis, a driving school's cars, a car dealer's demo and resale stock: credit allowed.
• Trucks, tempos and other goods vehicles, and buses with more than 13 seats: not in clause (a), so repair credit is allowed when used for business.
• An insurer settling a cashless claim for a car it insures: credit allowed under the proviso.

Our GST on cars guide covers the purchase side of the same block.

Worked examples in rupees

A company car at a service centre. A private limited company's 5-seater sedan, used by its sales manager, goes for a periodic service. The bill shows parts ₹8,000 at 18% and labour ₹3,000 at 18%: GST ₹1,980, total ₹12,980. Because the car is a motor vehicle with up to 13 seats not used for a listed purpose, the company cannot claim the ₹1,980.

A transporter's truck. A logistics firm's truck needs a clutch overhaul: parts ₹35,000 and labour ₹15,000, GST ₹9,000 at 18%. Goods vehicles are outside the block, so the firm claims the ₹9,000.

A tractor workshop. A farmer's tractor needs a hydraulic pump and gasket set worth ₹10,000 that fall within the concessional tractor-parts list, plus ₹2,000 of labour. Billed separately, GST is ₹500 on parts at 5% and ₹360 on labour: ₹860. Quoted as a single ₹12,000 repair, it risks being taxed at 18% — ₹2,160.

A comprehensive lift AMC. A housing society registered under GST pays ₹1,20,000 a year for a comprehensive lift AMC, billed quarterly. Each quarterly invoice of ₹30,000 carries ₹5,400 GST, ₹21,600 for the year. The society can claim credit only to the extent its own supplies to members are taxable.

A free phone replacement under warranty. A customer's phone fails in month eight and the service centre replaces it with a new unit supplied free by the brand under a delivery challan. No GST is charged to the customer, the brand pays none on the replacement and does not reverse credit (Circular 216/10/2024). If the customer also buys a new tempered-glass guard for ₹500, that sale carries 18%.

Work out GST on a repair bill

Sales (Add GST)Purchase (Remove GST)Price Comparison

AmountGST Rate

0%3% (Gold / silver)5%18% (Standard)40% (Sin / luxury)

Transaction Type

Intra-state (CGST + SGST)Inter-state (IGST)

Base Amount (Before GST)₹11,000.00

CGST (9%)₹990.00

SGST (9%)₹990.00

Total GST (18%)₹1,980.00

Total Amount (Including GST)₹12,980.00

Open the full GST Calculator (PDF, save, compare)

Registration and compliance for repair businesses

A repair business is a service provider for registration purposes. It must register once aggregate turnover crosses ₹20 lakh, or ₹10 lakh in the special category states that apply the lower limit; parts sold as part of repair jobs count in that turnover. A shop that also sells phones, accessories or spare parts over the counter is a mixed business, and if those goods sales are large, the goods threshold does not help — once any services are supplied, the services threshold of ₹20 lakh applies to the whole aggregate turnover.

Small repairers can opt for the composition scheme for services under section 10(2A), paying 6% of turnover up to ₹50 lakh. It suits neighbourhood shops whose customers are consumers and do not need credit, but business customers will prefer a regular supplier, and composition repairers cannot make inter-state supplies.

Invoices should show the SAC for labour and the HSN for each part, with the correct rate for each. The HSN code finder helps with part codes. Keep job cards linked to invoices; officers often reconcile parts purchased with parts billed, and unexplained differences are treated as unaccounted sales. Warranty jobs should be documented with the warranty reference and the manufacturer's approval, so free replacements are not mistaken for unbilled supplies.

Checks on a repair or AMC invoice

0/5

• Labour shown with the right SAC (998714 vehicles, 998715 appliances, 998716 phones) at 18%
• Each part listed separately with its HSN code and rate — especially concessional tractor or cycle parts
• Warranty work: nothing charged to the customer for covered items; extras invoiced
• AMC billed on or before each payment due date; advances taxed when received
• Customer is a business with a car up to 13 seats? It cannot claim the credit — don't promise it

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Common mistakes and how they are fixed

Lump-sum bills for concessional parts. Tractor and agricultural-equipment workshops that quote one figure lose the benefit of 5% parts. Itemise parts and labour on the job card and invoice.

Charging GST on free warranty work. Some service centres raise a "zero-value" invoice with notional GST or charge GST on the replaced part's value. Under Circulars 195 and 216, nothing is payable on the free replacement. Only amounts actually charged are taxable.

Claiming credit on company-car servicing. Businesses often claim the GST on car servicing along with other expenses. The block in section 17(5)(ab) is specific; reverse the credit with interest at 18% a year if it was used.

Treating building repairs as heading 9987. Repairs to a factory roof or office interiors are construction or works contract services, and credit is blocked to the extent they are capitalised. Classify them under heading 9954.

Official links

• Notification 11/2017-CT(R) — updated consolidated copySerial 25; SAC 9987 codes
• Notifications 15–17/2025-CT(R) (GST 2.0)Rates from 22 September 2025
• Circular 195/07/2023-GSTWarranty replacement and repair
• Circular 216/10/2024-GSTWhole-product replacement; extended warranty
• Circular 47/21/2018-GSTParts and labour shown separately
• Section 17, CGST ActBlocked credit on motor vehicle repairs

What to do next

If you run a repair business, set your invoice template to show parts and labour on separate lines with HSN and SAC codes — the invoice generator does this — and write a short warranty procedure for your staff based on Circulars 195 and 216. Starting a phone repair counter? The mobile repair shop guide covers setup and pricing, and the GST on mobile phones guide covers handset and accessory rates. If you buy repairs for a business, check which ones you can claim through the input tax credit guide.

This is general information, not legal or tax advice — confirm on the official source or with a professional.

Frequently asked questions

What is the GST rate on repair and maintenance services?

Repair, maintenance and installation services (heading 9987) are taxed at 18% under serial 25(ii) of Notification 11/2017-CT(Rate). Exceptions: maintenance, repair and overhaul of aircraft and of ships and vessels is 5%, and house-keeping jobs such as plumbing and carpentry booked through an app from a worker not liable to register are 5% (no input tax credit), paid by the app. GST 2.0 did not change these.

Is GST charged on free replacement of parts under warranty?

No. Circular 195/07/2023-GST says the price of the original product already includes the expected cost of warranty repairs, so no further GST is due when parts are replaced or repairs done free during warranty, and the manufacturer need not reverse input tax credit. Circular 216/10/2024 extended this to replacement of the whole product. Any extra amount charged to the customer is taxable.

Can a business claim ITC on car repair and servicing?

Usually not. Section 17(5)(ab) of the CGST Act blocks credit on servicing, repair, maintenance and general insurance of motor vehicles with up to 13 seats, unless the business uses the car for resale, passenger transport or driving training, or is a car manufacturer or the insurer of that car. Repairs to trucks, goods vehicles and buses with more than 13 seats are not blocked.

How is GST charged when a repair bill has parts and labour?

Circular 47/21/2018-GST says that where the value of goods (spare parts) and services (labour) are shown separately, each is taxed at its own rate. Most parts and labour are both 18%, so the difference shows up mainly with concessional parts — tractor parts at 5%, for example. A single lump-sum price may be treated as a composite supply taxed as a repair service.

What is the GST rate on an annual maintenance contract (AMC)?

An AMC for machinery, IT equipment, lifts or appliances is a maintenance service at 18%. A comprehensive AMC that includes parts is usually a composite supply with maintenance as the principal supply, so the whole fee is taxed at 18%. A labour-only AMC is 18% on the fee, and parts supplied later are billed at their own rates.

What is the SAC code for repair and maintenance services?

Heading 9987 covers maintenance, repair and installation (except construction). Common codes are 998711 (fabricated metal products), 998712 (office machines), 998713 (computers), 998714 (transport machinery, including vehicles), 998715 (household appliances), 998716 (telecom equipment including mobile phones), 998717 (industrial machinery), 998718 (lifts and escalators) and 998729 (other goods).

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 11 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1. 1.Notification No. 11/2017–Central Tax (Rate), updated consolidated version (Telangana State Tax copy) — Telangana Commercial Taxes Department · accessed 11 October 2026
2. 2.Notifications No. 15/2025, 16/2025 and 17/2025–Central Tax (Rate), 17 September 2025 (Gazette) — Ministry of Finance (Gazette of India) · accessed 11 October 2026
3. 3.Circular No. 195/07/2023-GST, 17 July 2023 — CBIC (GST Council website) · accessed 11 October 2026
4. 4.Circular No. 216/10/2024-GST, 26 June 2024 — CBIC (GST Council website) · accessed 11 October 2026
5. 5.Circular No. 47/21/2018-GST, 8 June 2018 — CBIC (GST Council website) · accessed 11 October 2026
6. 6.Section 17 — CGST Act, 2017 — CBIC · accessed 11 October 2026
7. 7.Notification No. 17/2017–Central Tax (Rate) — updated version — GST Council · accessed 11 October 2026
8. 8.No need to reverse ITC by manufacturer in respect of free replacement parts or repair services — Taxmann · accessed 11 October 2026