Prior to circular dated 26th March, 2018, there were so many confusions/doubts regarding Jobwork under GST, but the recent circular came up with clarities which were raising in every head.
In this write-up, the author tries to explain the related provisions, compliances under job work under GST.
First of all lets under the meaning of Job work. Job work is a process or treatment which is undertaken by a person on goods (inputs or capital goods) and those goods actually belongs to some other registered person. From this definition, two things can be concluded:
- There are 2 parties involved. The one who undertakes the process/treatment of goods, called the 'job worker' and the other who actually is the owner of the goods, called 'Principal'.
- The Principal has to be registered under GST.
Let's understand further with the help of FAQs:
Ques 1. Whether the goods which are being sent to the job worker by the principal, is to be treated as supply or not?
Ans The Principal may send goods to job worker without the payment of tax, but on the completion of the Job work, the principal shall either bring back the goods to his place of business or supply (including export) the same directly from the place of business/premises of the job worker within:
One year- In case of Inputs, or
Three Years- In case of capital goods (except moulds and dies, jigs and fixtures or tools)
Though, sending goods for job work is not a supply as such, but it acquires the character of supply only when the inputs/capital goods sent for job work are neither received back by the principal nor supplied further by the principal from the place of business / premises of the job worker within one/three years of being sent out.
The responsibility for sending the goods for job work as well as bringing them back or supplying them has been cast on the principal.
In a layman language, if on the completion of job work, the goods are not returned back to principal within stipulated time frame (1 year/3 years), then it shall be treated as supply.
Ques 2. Whether Principal is required to be registered or not?
Ans. It is only a registered person who can send the goods for job work. Hence, the Principal is required to be registered
Ques. 3 Whether Job worker is required to obtain registration under GST?
Ans. There are following two cases:
|
Cases |
Registration is required or not? |
|
Where both the parties i.e. Principal and Job worker are located in the same State |
If the aggregate turnover (to be computed on all India basis) in a financial year exceeds the specified threshold limit (i.e. Rs 20 lakhs or Rs. 10 lakhs in case of special category States except Jammu & Kashmir |
|
Where both the parties i.e. Principal and Job worker are located in different State |
As per clause (i) of section 24 of the CGST Act, it comes under compulsory regidtration. However, exemption from registration has been granted in case the aggregate turnover of the inter State supply of taxable services does not exceed Rs 20 lakhs or Rs. 10 lakhs in case of special category States except Jammu & Kashmir in a financial year |
In nutshell, from above discussion, it is clarified that a job worker has to be compulsorily registered, where his aggregate turnover, in a financial year exceeds the threshold limit (20 lakhs/10lakhs)
Legal Provisions:
- Issuance/Endorsement of challan- Principal may may send and/or bring back inputs/capital goods for job work without payment of tax, under intimation to the proper officer and subject to the prescribed conditions, under the cover of a challan issued by the principal, containing the details. This rule has been amended and now a job worker may endorse the challan issued by the principal.
- Furnishing Form GST ITC-04- The principal is also required to file FORM GST ITC-04 every quarter.
Further clarification on issuance of challan, furnishing of intimation and other documentary requirements:
|
Cases |
Requirements- issuance of challan, furnishing of intimation and other documentary requirements |
|
Where goods are sent by principal to only one job worker |
3 copies of challan shall be prepared. Bifurcation of these copies is: 1 copy- with Principal only, 2 Copies- sent to job worker, from which 1 copy should be sent to Principal while returning. The FORM GST ITC-04 will serve as the intimation. |
|
Where goods are sent from one job worker to another job worker |
The challan issued by the principal may be endorsed by the job worker sending the goods to another job worker, indicating therein the quantity and description of goods being sent. |
|
Where the goods are returned to the principal by the job worker |
The job worker should send one copy of the challan received by him from the principal while returning the goods to the principal after carrying out the job work. |
|
Where goods are returned in piecemeal by the job worker |
In case the goods after carrying out the job work, are sent in piecemeal quantities by a job worker to another job worker or to the principal, the challan issued originally by the principal cannot be endorsed and a fresh challan is required to be issued by the job worker. |
FORM GST ITC-04 to be submitted by the 25th day of the month succeeding the quarter or within such period as may be extended by the Commissioner.
Hope this information will help you in your Professional endeavors.
The author can also be reached at pcs.ekta@gmail.com
Disclaimer:
The entire contents of this article is solely for information purpose and have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation.. It doesn't constitute professional advice or a formal recommendation. The author has undertook utmost care to disseminate the true and correct view and doesn't accept liability for any errors or omissions. You are kindly requested to verify & confirm the updates from the genuine sources before acting on any of the information's provided herein above.
CAclubindia
