The Government of India has clarified the eligibility for input tax credit (ITC) under the Central Goods and Services Tax (CGST) Act, specifically concerning goods delivered under Ex-Works (EXW) contracts. In the automobile sector, under an EXW contract, the ownership of goods (vehicles) passes to the dealer when the supplier (OEM) hands over the goods to the transporter at the supplier’s factory gate. ITC can be claimed by the dealer at this point, even if the goods are physically received later at the dealer’s premises.

The clarification emphasizes that ITC is available when the goods are handed over to the transporter at the OEM’s factory gate, as this is considered a deemed receipt of goods according to the CGST Act. This applies to any goods delivered under EXW contracts, where the ownership transfers at the supplier’s premises and the goods are directed for delivery to the recipient or another person. Therefore, dealers can claim ITC at the time of handover to the transporter, not when the goods are physically received.