VAT ON JOB WORK EXPENSES

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

03 January 2011 IF A DEALER PURCHASE A MATERIAL & SEND IT TO JOB WORK FOR A PARTS & THAN MANUFACTURE A MACHINE & SOLD IT.

IF SCRAP OF JOB WORK MATERIAL IS TAXABLE UNDER VAT ACT?

IF YES THAN CONSIDER IN WHICH SECTION IT IS TAXABLE?

for gujarat state

URGNTLY

CA Shailesh Kumar Bhagat

CA Shailesh Kumar Bhagat (Expert)
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04 January 2011 Taxable.

for section please mention the name of State.

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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02 August 2025 Regarding VAT on scrap from job work in Gujarat:

* When a dealer sends material for job work and receives scrap generated from that material, **the scrap is treated as a sale under VAT** because it is the sale of goods arising from the business activity.

* In Gujarat VAT Act, scrap arising from job work or manufacturing is taxable under the **definition of “sale”**.

* The **scrap value must be included in the turnover** and VAT should be paid on the sale value of the scrap.

* The applicable VAT rate on scrap is usually **12.5%**, but you should check the latest schedule for the exact rate on scrap metal or relevant goods.

* Relevant section: The **Gujarat VAT Act, Section 2(45)** defines “sale” broadly, including transfer of scrap arising from business activity.

**Summary:**

* Scrap generated in job work is taxable under VAT in Gujarat.
* VAT must be paid on scrap sale value at applicable rate (often 12.5%).
* Include scrap sale in your VAT turnover and file accordingly.

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