GST Provisions on Goods send for Job work

[Rajeev Jain]

Meaning of job work?

Job work means processing or working on raw materials or semi-finished goods supplied by the principal manufacturer to the job worker. This is to complete a part or whole of the process which results in the manufacture or finishing of an article or any other essential operation. The job workers send back the article to the principal manufacturer.

As per GST Act, job work means any treatment or process undertaken by a person on goods belonging to another registered person. The person doing the job work is called job worker.

It is to be noted that value of goods sent by the principal will not be included in the aggregate turnover of the registered job worker.

ITC on goods sent for job work

The principal manufacturer will be allowed to take credit of tax paid on the purchase of goods sent on job work subject to the following conditions:

1. Goods can be sent to job worker:

• From principal’s place of business
• Directly from the place of supply of the supplier of such goods

ITC will be allowed in both the cases.

2. Effective date for goods sent depends on place of business:

• Sent from principal’s place of business- Date of goods sent out
• Send directly from the place of supply of the supplier of such goods- Date of receipt by job worker

Here, Effective date is very important because it will help to determine the point of taxation if the goods are not returned back within the specified time.

3. Specified Time Limit: The goods sent must be received back by the principal manufacture within the following period:

• Capital Goods- 3 years
• Input Goods- 1 year

4. In case goods are not received back within the period mentioned above, such goods will be treated as supply from the effective date and tax will be payable by the prinicpal.

Documents, Accounts & Records to be maintained:

The responsibility for keeping proper accounts for the inputs or capital goods shall lie with the principal.

Challan

• All goods sent for job work must be accompanied by a challan.
• The challan will be issued by the principal.
• It will be issued even for the inputs or capital goods sent directly to the job-worker.
• The details of challans must be shown in FORM GSTR-1.
• Details of challans must also be filed through Form GST ITC – 04.

The challan issued must include the following particulars:

• Date and number of the delivery challan
• Name, address and GSTIN of the consigner and consignee
• HSN code, description and quantity of goods
• Taxable value, tax rate, tax amount- CGST, SGST, IGST, UTGST separately
• Place of supply and signature

Form ITC-04

FORM GST ITC-04 must be submitted by the principal every quarter. He must include the details of challans in respect of the following-

• Goods dispatched to a job worker or
• Received from a job worker or
• Sent from one job worker to another

It must be furnished on or before 25^th day of the month succeeding the quarter. For example, for Oct-Dec quarter, the due date is 25^th Jan.

With effect from 1st October 2021, the frequency of filing the ITC-04 form has been revised through the Central Tax notification number 35/2021 dated 24th September 2021, as follows-

(1) Those with AATO more than Rs.5 crore – Half-yearly from April-September- due on 25th October and October-March due on 25th April.

(2) Those with AATO up to Rs.5 crore – Yearly from FY 2021-22 due on 25th April.

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The author can be reached at "rajiv@rajivydai.com"