JOB WORK- GST Complete Guide
In this article I am trying to compile all the provisions which are applicable to job work transaction.
Following points will be covered-
1) Definition of Job work
2) Requirement of Registration
3) Requirement of E-Way bill
4) Place of supply
5) Time limit for goods return to the principle
6) Input Tax Credit
7) Date of Filing return
8) Valuation & taxability of the services
9) Responsibility of documentation
10) Treatment of waste if any
1)Definition of Job work:
Section 2(68) of the CGST Act defines job work to mean any treatment or process undertaken by a person on goods belonging to another registered person and the ownership of the goods does not transfer to the job-worker but it rests with the principal manufacturer
2) Requirement of Registration: If the receipts of job worker exceed more than 20 lakhs other than specified states then only job worker is liable for registration.
3) Requirement of E-Way Bill: every registered person who causes movement of goods f consignment value exceeding more than 50000/- or the limit specified by the states needs to be furnish the information in E-Way bill.
However the above limit is not applicable if it is inter-state supply.
4) Place of Supply: For charging GST place of supply is very important. For deciding which tax should levied ie CGST/SGST/IGST then it should be considered from Principle perspective and not from Job work perspective.
| Sr No. | Location of Principle | Location of Job Worker | Location of Recipient | POS
(where delivery of Goods terminates) |
Levy of Taxes |
| 1 | Delhi | Mumbai | Mumbai | Delhi | IGST |
| 2 | Delhi | Mumbai | Delhi | Delhi | CGST + SGST |
5) Time Limit to return the goods –
According to section 143 of CGST Act provides that the registered principal may send inputs or capital goods or both to a job worker for job work without payment of tax and subsequently to another job worker and so on if required, provided the goods has to be received back/supplied including sale/ export from Job worker’s place (refer note) within stipulated time as follows:
| Sr No | Type of Goods | Time limit |
| 1 | Inputs | within 1 year from the date of its removal for job work |
| 2 | Capital goods | within 3 years from the date of its removal for job work |
However it can be extended for 1year/ 2 years for inputs/capital goods with the prior permission of Commissioner.
If the goods are not return back which is specified above then it will be deemed that there is supply and principal is liable to pay taxes along with interest from the date of sending the goods
Note: Principal has declared job worker’s place as additional place of business
6) Input Tax Credit:
- Principal can avail the credit according to section 16 subject to fulfillment of the conditions & restriction mentioned in section 17
- Other than above, principal can avail credit ITC as per section19 which provides that ITC on goods supplied to job worker by the principal would be entitled to take the credit of input tax paid on inputs/capital goods sent to the job- worker for the job work.
- Further the principal can take the credit even when the goods have been directly supplied to the job worker without bringing into the premise of the principal.
- The principal need not wait till the inputs/capital goods are first brought to his place of business.
7) Date of Return filing:
The principal is required to file statement of records in ITC-04 on common portal on quarterly basis by 25th of the month succeeding the quarter.
Under form GST ITC – 04, following details are to be provide:
Goods dispatched to job-worker;
Goods received from job-worker;
Goods send from one job-worker to another job-worker.
8) Valuation and taxability of services:
Job worker has to issue an invoice for the value of his services i.e. for job work charges. As per section 15(2)(b) of CGST Act, any amount that the supplier is liable to pay in relation to the supply but which has been incurred by the recipient will form part of the valuation for that supply, if it has not been included in the price of such supply.
Following is the summary of rate which is in force
| Sr No | Type of services | Rate of tax | ||
| 1 | 26 (i) Services by way of job work in relation to specified in— | 5% | ||
| 2 | 26 (ib) Services by way of job work in relation to diamonds falling under chapter 71 in the First Schedule to the Customs Tariff Act, 1975; | 3% | ||
| 3 | 26 (ia)Services by way of job work in relation to-
(a) manufacture of umbrella; b) printing of all goods falling under Chapter 48 or 49, which |
12% | ||
| 4 | 26 (ic) Services by way of job work in relation to bus body building; | 18 | ||
| 5 | 26 (id) Services by way of job work other than (i), (ia), (ib) and (ic) above; | 12% | ||
| 6 | 26 (iii) tailoring services | 5% | ||
| 7 |
|
18% |
9) Responsibility of Documentation
Principal is solely responsible for keeping proper records of inputs and capital goods sent to job worker for job work.
10) Treatment of waste
As per section 143 (5) of the CGST Act, 2017, waste generated at the premises of the job-worker may be supplied directly by the registered job-worker from his place of business on payment of tax, in such case GST is payable by job-worker, however, if job-worker is not registered than such waste may be cleared by the principal manufacturer and GST would be payable by the principal manufacturer.
Other benefit:
a. According to Rule 45 of CGST Rule 2017, principal which provides that the inputs, semi-finished goods or capital goods being sent for job work (including that being sent from one job worker to another job worker) can be sent by way of delivery challan without the payment of taxes subject to return back provision.
CA Monika Rathi
For any queries you can send your queries at cassrpn@gmail.com/rathimonika94@gmail.com
