Chetan Chauhan
Table of Contents
Under the Goods and Services Tax (GST), job work refers to the process of performing certain specific tasks on goods belonging to someone else and returning the processed goods to the owner
There are specific provisions under GST for job work. According to the GST laws, a job worker can only undertake job work for a registered person. The registered person is required to obtain a job work authorization in the form of a letter or document.
There are certain conditions that must be met for the job work provisions under GST to apply. The job work must be carried out on goods that are received from a registered person and are intended for supply. The job work must also be done at a place that is separate from the place of business of the registered person. In addition, the job worker must not use the processed goods for any purpose other than returning them to the registered person.
Job Work Procedure under GST
The procedure for carrying out job work under GST is as follows:
Step 1 : The owner of the goods (called the principal) must obtain a GST registration, even if the principal is not engaged in the supply of goods or services.
Step 2 : The job worker must also obtain a GST registration if the value of the taxable supplies made by the job worker, on his own account, exceeds the prescribed threshold limit.
Step 3 : The principal must issue a job work authorization letter to the job worker, specifying the nature of the work to be carried out and the period for which the authorization is valid.
Step 4 : The job worker must maintain separate records for the goods received from the principal and the goods sent back to the principal, as well as the goods used or consumed in the course of the job work.
Step 5 : The job worker must pay GST on the value of the goods used or consumed in the course of the job work, as well as any additional value added by the job worker.
Step 6 : The principal must pay GST on the value of the goods received from the job worker, after deducting the GST paid by the job worker on the value of the goods used or consumed in the course of the job work.
Step 7 : The principal must issue a delivery challan, accompanied by a copy of the job work authorization letter, when sending the goods to the job worker, and a receipt voucher, accompanied by a copy of the delivery challan, when receiving the goods back from the job worker.
Step 8 : The principal must file the GST returns and pay the GST due, based on the value of the taxable supplies made by the principal, including the value of the goods received from the job worker.
Input Tax Credit On Supply Of Goods To Job Worker
The job worker is entitled to claim an input tax credit on the inputs and input services used in the job work process. The input tax credit can be claimed on the GST paid on the inputs and input services, subject to the conditions specified under the GST laws.
| Conditions for ITC on Goods Sent for Job Work | The principal manufacturer can claim Input Tax Credit (ITC) on goods sent for job work under two conditions:
|
| ITC Allowance | ITC is allowed in both cases, facilitating the principal manufacturer to claim tax credit on the purchase of goods sent for job work. |
| Time Limit for Return |
Processed goods, including capital goods and input goods, must be returned to the registered person within a specific time frame. Capital Goods- 3 years |
| Consequences of Delay | If the processed goods are not returned within this time limit, the job worker will be liable to pay GST on the supply of the goods. |
Which GST Form is required to be submit for Job Work?
Principals are required to submit Form GST ITC-04 half-yearly and yearly. This form captures details related to :
- Goods dispatched to job-worker or
- Goods received from job-worker or
- Goods send from one job-worker to another job-worker.
Due date of GST ITC-04
With effect from 1st October 2021 the due dates are as follows:
| Turnover limit | Payment Type | Due Dates |
| Turnover above Rs.5 crore | Half-yearly |
For April-September - 25th October For October-March - 25th April |
| Turnover upto or below Rs.5 crore | Yearly | 25th April |
Rules For The Movement Of Goods
The job worker is required to follow specific rules for the movement of goods between the registered person and the job work premises.
- The registered person is required to issue a challan, or an invoice, for the movement of the goods to the job worker.
- The challan must include :
- the GSTIN of the registered person,
- the date of the challan,
- the quantity and description of the goods,
- and the signature of the registered person or their authorized representative.
GST Rates For Job Work
The GST rates for job work are :
| Type of Industry | GST Rate |
| Textile Industry such as job work for fabric and garments etc | 5% |
| Other Industry such as Electronics and Engineering industries etc | 12% |
Requirement of E-way Bill for Job Work
E-way bill is mandatory if goods are sent from one state to a job worker in another state, the principal must generate an e-way bill even if it's below ₹50,000.
Maintenance of records and documents
The job worker is required to maintain proper records and documents for the job work activities. These records must include the details of the goods received, the details of the job work carried out, and the details of the goods returned to the registered person. The job worker is also required to issue a certificate to the registered person, stating the details of the job work carried out and the goods returned.
Conclusion
In summary, under GST, job work refers to the process of performing specific tasks on goods belonging to someone else and returning the processed goods to the owner. The job worker is required to be registered under GST and must follow specific rules for the movement of goods and the maintenance of records and documents. The registered person is responsible for paying GST on the supply of the goods after they are processed at the job work premises.
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