Whether the job worker will have to be compulsorily registered under GST

 

What is job work?

          Job work means processing or working on raw materials or semi-finished goods supplied by the principal manufacturer to the job worker. This is to complete a part or whole of the process which results in the manufacture or finishing of an article or any other essential operation.

          For example, big shoe manufacturers (principals) send out the half-made shoes (upper part) to smaller manufacturers (job workers) to fit in the soles. The job workers send back the shoes to the principal manufacturer after completion of their work.

          As per Section 2(68) of the CGST Act, 2017, “Job work” means any treatment or process undertaken by a person on goods belonging to another registered person.

          The person doing the job work is called job worker. The registered person on whose goods (inputs or capital goods) job work is performed is called Principal.

 

Rules regarding Job Work-

1. The registered principal may without payment of tax, send inputs or capital goods to a Job worker for job work and if required from there subsequently to another job worker.
2. On completion of the job work, the principal shall either bring back the goods to the place of business or supply the same directly from the place of business/premises of the Job worker. In case of Inputs, this period shall be within 1 year and for Capital goods it shall be within 3 years.
3. If Inputs and capital goods are not received back within the prescribed period, then it shall be deemed to be a supply by the principal on the day when the said inputs/capital goods were sent out by principal.
4. The responsibility of keeping proper accounts of inputs and capital goods sent for job work lies with the principal.
5. The responsibility for sending the goods for job work as well as bringing them back or supplying them has been on the principal.
6. Job worker in addition to the goods received from the principal, can use his own goods for providing the services of job work.

 

 

 

Registration of a Job Worker-

In case both the principal and the job worker are located in the same state, a job worker is required to obtain registration only if his aggregate turnover to be computed on all India basis in a financial year exceeds the limit (Rs. 20 lakh or Rs. 10 lakh in case of special category states except Jammu & Kashmir)

If Principal and the job worker are located in different states, the job-worker supplying inter-state services shall be compulsorily required to get registered under GST. However, exemption from registration has been granted in cases where the aggregate turnover of the inter-state supply of taxable services does not exceeds Rs. 20 lakhs or Rs. 10 lakhs in a financial year.

Job worker is required to obtain GST registration only in cases where his aggregate turnover to be computed on all India basis in financial year exceeds the limit regardless of whether the principal and the job worker are located in the same state or in different states.