Job Work under GST: Taxability & Compliance

GST & IDT

What is Job Work?

Any treatment or process undertaken by a person on goods belonging to another registered person is called as Job Work. The registered person on whose goods job work is performed is called Principal and the person who treats or processes the goods sent by the principal is called Job Worker. For Example, M/s ABC sent yarn to M/s XYZ for the purpose of dyeing on it. After completion of dye work, material will be sent back to M/s ABC. It is a job work. In another exampl, M/s ABC sent his machinery to M/s XYZ for repair work. After completion of repair work, machinery will be sent back to M/s ABC. It is a Job Work.

Taxability of Job Work in GST regime.

  • The principal manufacturer will be allowed to take credit of tax paid on the purchase of goods sent on job work.
  • As per Section 143 of CGST Act, the principal can send the goods to a job worker for job work without payment of tax if it is received back in prescribed time limit.
  • If the goods are not brought back or supplied from the place of job worker, within the stipulated time, it is considered as supply on the date when the goods were sent to job worker (in case good are sent  directly from the place of supply of the supplier of such goods then Date of receipt by job worker) and the invoice should be issued by the principal for the same or challan issued will be treated as an invoice for such supply.
  • The principal can also send the goods from the place of one job worker to another and so on.
  • E-waybill is required to be generated irrespective to value of goods sent in case of inter-state movement of goods for job work.

Time limit for receiving back the goods sent for Job Work

  • To avail tax free movement of goods forbjob work, goods sent for Job Work must be received back by the principal manufacture within the following period:
  1. Capital Goods- 3 years
  2. Input Goods- 1 year
  • The principal should, within one year in case of inputs and three years in case of capital goods, bring back the goods or supply the same directly from the place of job worker including supply for export purpose.
  • The provisions of return of goods is not applicable in case of moulds and dies, jigs and fixtures or tools supplied by the principal to job-worker.

Points to be noted for Job Work

  • The job worker can also use his own goods, in addition to the goods sent by the principal, for providing the services of job work.
  • The job worker need not necessarily to get GST registration for sending the goods by the principal for job work
  • The job worker is to get registration only when his turnover exceeds the threshold limit of Rs.20 lakhs in a financial year, irrespective of his place of business is in the same state where principal is located or outside state
  • The principal can supply the goods, after the completion of job work, from the place of job worker provided that the place has been declared as his additional place of business except in case the job worker is registered
  • All goods sent for job work must be accompanied by a challan. The challan will be issued by the principal.
  • Any waste and scrap generated during the job work process may be supplied by the job worker on payment of tax, if he is registered, or by the principal, if the job worker is unregistered
  • The principal is allowed to take input credit on the inputs/capital goods that is sent to job worker for job work purpose even the inputs are sent to job worker directly from the supplier.
  • The period of one year/three years is counted from the date of receipt of inputs/capital goods by the job worker.
  • The goods can be sent by the principal to the job worker, and vice versa and from the job worker to another job worker by delivery challan as prescribed
  • The principal is required to file the GST ITC-04 every quarter by 25th day from the end of the quarter about the details of job work sent and received back
  • The delivery challan should be prepared in triplicate.  Two copies of the same may be sent to job worker along with goods.  The job worker should send one copy of the challan while returning the goods to the principal
  • Where the goods are sent from one job worker to another job worker, either principal or job worker can issue the challan or the challan issued by the principal can be endorsed by the job worker indicating the quantity and description of goods and so on
  • Where the goods move from the place of supplier to the job worker directly, the principal should issue a delivery challan to the job worker directly.  The goods should be moved along with invoice mentioning the job worker as consignee
  • In case of imports, the goods can be moved from customs to job worker with a copy of bill of entry along with delivery challan issued by the principal
  • Where the goods are sent by one job worker to another job worker in piecemeal, the challan issued by the principal cannot be endorsed.  A fresh challan to be issued by the job worker
  • The value of moulds and dies, jigs and fixtures or tools may not be included in the value of job work service provided its value has been factored in the price of job work service
  • Place of supply shall be determined, where the goods are supplied from the place of job worker, based on the place of the principal