The GST department has raised the demand for the fiscal years 2023-24 and 2024-25, questioning the tax treatment of the free hardware replacements provided under the “Worry Free” initiative. This comes at a precarious time for the Chinese manufacturer, which saw its India net profit collapse to just ₹16 crore in FY25.
Why the GST Demand?
The core of the dispute lies in how “free” warranty services are classified under Indian tax law.
- The Tax Argument: Authorities are reportedly investigating whether these “free” replacements should be treated as a taxable supply. If the replacements are not deemed part of the original “performance obligation” (i.e., the original purchase price), the government may view them as separate transactions subject to GST.
- The OnePlus Defense: The company has deposited ₹10 crore under protest but maintains that the demand has “low probability” of becoming a final liability. Their legal counsel argues that the cost of potential warranty repairs was already baked into the original sale price, on which GST was already paid.
A “Perfect Storm” of Financial Woes
The ₹93 crore demand is just one of several challenges highlighted in OnePlus India’s recent Registrar of Companies (RoC) filings:
| Metric / Issue | Status in FY2024-25 | Impact |
| Revenue | ₹12,983 Crore | 13% Decline YoY |
| Net Profit | ₹16 Crore | 93% Drop (from ₹230 Cr) |
| Auditor Remarks | “Adverse Comments” | Lack of audit trails post-ERP migration |
| Total Tax Notices | ₹280 Crore | Aggregate of various show-cause notices |
The “Green Line” Context
The green line issue—a vertical neon stripe that appears on AMOLED panels, often after software updates—has plagued the industry since 2022.
- Industry Exception: OnePlus is currently the only smartphone brand offering a “lifetime” warranty for this specific issue in India.
- Customer Relief vs. Fiscal Risk: While the program has been a major PR win and a relief for thousands of users, it has created a massive logistical and financial burden, now complicated by the tax probe.
Conclusion: A Regulatory Disconnect
Industry experts suggest that the OnePlus case highlights a growing “regulatory disconnect” in India. While consumer courts and the Ministry of Consumer Affairs have been pushing OEMs to take more responsibility for hardware defects, the GST department is simultaneously looking to tax those very remedial measures. For now, OnePlus is continuing its replacement program, but the ₹93 crore demand serves as a warning to other brands: “lifetime” support may come with an unexpected price tag.
