SUB GST p5.8

GST on job work

11 May 2020

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

For example, big shoe manufacturers send out the half-made shoes to smaller manufacturers to fit in the soles. Then the job workers send back the shoes to the principal manufacturer.

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

ITC on goods sent for job work

A tax credit will be allowed to the Principal manufacturer on the goods sent for job work.

However, there are certain conditions to be fulfilled.

1. Goods can be sent to job worker:

   • From the principal’s place of business

   • Directly from the place of supply of the supplier of such goods

   • ITC will be allowed in both cases.

2. The effective date for goods sent depends on the place of business:

   • Sent from principal’s place of business- Date on which goods send

   • Sent directly from the place of supply of the supplier of such goods- Date of receipt by the job worker

   • The effective date is important because it will help to determine the point of taxation if the goods are not returned back within the specified time (see point C below)

The Principal manufacturer must receive the goods back within the following period:

• Capital Goods-  three years

• Input Goods- one year

Such goods will be treated as supply from the effective date if they are not received back with the period mentioned above and tax will be payable by the principal.

Challan

All the 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 I shall be issued containing the following Details:

• Date and number of the delivery challan

• Name, address, and GSTIN of the consignor 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

Every Quarter FORM GST ITC-04 must be submitted by the principal

. He must include all 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

All of these must be furnished on or before the 25th day of the month succeeding in the quarter. For example, for the Apr-Jun quarter, the due date is 25th Jul.

FORM GST TRAN-1

The job worker and the principal manufacturer have to submit a FORM GST TRAN-1 and mention following required details of stock held by job worker for principal/ with job worker/by job

The due date for FORM GST TRAN-1 is 30th November 2017

There is a need to specify the stock of the inputs, semi-finished goods or finished goods held by them on 1st July 2017.

GST Rates on Job work

Job work and GST Rate

• Agriculture, fishing, forestry, animal husbandry  = 0%

• Intermediary services related to cultivation and animal rearing = 0%

• Printing of Newspapers = 5%

• Textile and textile product = 5%

• Jewellery = 5%

• Printing of books including Braille books, journals, and periodicals = 5%

• Processing of hides leather and skin = 5%