CBIC Circular 241/35/2024 dt. 31st December 2024

Availability of ITC under section 16(2)(b) of the CGST Act, 2017 concerning goods delivered by the supplier at their place of business under Ex-Works (EXW) contracts.

In the automobile sector, OEMs often engage in EXW contract.The circular clarifies that, under such arrangements, dealers are deemed to have received the goods when the supplier hands them over to the transporter at the factory gate.
This interpretation aligns with the Explanation to  section 16(2)(b) of the CGST Act, which allows for deemed receipt of goods when delivered to a third party on the recipient’s direction.

Therefore, dealers can avail ITC at the point of handover, provided all other conditions for claiming ITC are met.

Source : https://taxinformation.cbic.gov.in/view-pdf/1003255/ENG/Circulars