input on capital goods

Yes credit is available.  But credit of SGST can be used for payment of SGST first and balance for IGST on outward supply.  Credit of CGST can be used for payment of CGST first and balance for IGST.  Credit for IGST can be used for IGST, CGST and SGST in that order.

All about Job Work

Input credit on job work is one of the nuances of the bill which is troubling manufacturers in the country.  In this article, we are going to discuss the tax and input credit implications in case of goods sent for job work before and returned after the appointed date, in detail.

After purchase of capital goods and/or inputs a principal manufacturer may send he goods for further processing to a job worker, in such a situation the principal manufacturer will be allowed to take credit of tax paid on purchase of such specific goods send on job work.

Procedures for claiming Input Credit on Job Work

A. Goods purchased may be send to job worker in the following manner:

1. From principal’s place of business
2. Directly from the place of supply of the supplier of such goods

ITC will be allowed in both the cases.

B. Effective date for goods send depends on place of business:

1. send from principal’s place of business- Date of goods send out
2. send Directly from the place of supply of the supplier of such good- Date of receipt by job worker

C. The goods send must be received back by the principal manufacture within the following period:

1. Capital Goods- 3 years
2. Input Goods- 1 year

from date of being send out or receipt by job worker depending on place of business from where goods are send- Refer point- A & B

D. In case goods are not received within the period as mentioned in point-C above, such goods will be treated as supply from effective date and tax will be payable on such deemed supply and the challan issued will be treated as an invoice for such supply

Conditions and restrictions for claiming Input Credit on Job work

A. Inputs, semi-finished goods or capital goods send on job work

1. From principal’s place of business
2. Directly from the place of supply of the supplier of such goods

must be dispatched along with a challan

B. The challan issued must include the following particulars:

1. date and number of the delivery challan
2. name, address and GSTIN of the consigner and consignee
3. HSN code, descripttion and quantity of goods
4. Taxable value, tax rate, tax amount- CGST, SGST, IGST, UTT separately
5. Place of supply and signature

C. The details of challan must be shown in FORM GSTR-1

E. Details of goods/capital goods sent to job worker and received back must be filed through Form GST ITC – 4

Conclusion

A considerable amount of time has been provided by the government to the job workers for returning goods to the principal holder. GST will help in maintaining transparency in the details of input credit on goods sent for job work.