Table of Contents
1. What do you mean by job work?
- There are times wherein a registered person gives goods to another person to carry out any intermediate production process. Such intermediate production process is called as job work.
- The person who sends the goods is called as the principal and the person who receives the goods is called as the job worker.
- Section 2(68) of the CGST Act, 2017 defines job work as ‘any treatment or process undertaken by a person on goods belonging to another registered person’.
2. Can a principal supply goods directly from the premises of a job worker?
- Yes, he can supply goods directly from the premises of a job worker provided he has listed the place of the job worker as an additional place of business under his GST registration.
3. Does the ownership of goods get transferred to the job worker during the process of job work?
- No, the ownership of goods remains with the principal and does not get transferred to the job worker at any point of time.
4. Should the principal charge GST while sending the goods to the job worker?
- The principal need not charge any GST while sending the goods to the job worker provided the job worker returns the goods to the principal within the prescribed time after completing the job work.
- The inputs, semi-finished goods or capital goods is required to be sent to a job worker under a delivery challan which will be issued by the principal. Such delivery challan is required even in case where such goods are sent directly to a job worker.
5. What is the prescribed amount of time within which a job worker should return the goods to the principal to avoid levy of GST?
- In case of inputs (goods) sent to job worker:
- The principal must receive the goods within 1 year from the effective date
- In case of capital goods:
- The principal must receive the capital goods within 3 years from the effective date.
- If the goods are not received within the prescribed time limit, the supply of goods to the job worker will be treated as a taxable supply and GST should be charged by the principal.
- This provision of return of goods shall not apply to moulds, dies, jigs, fixtures or tools supplied by the principal to the job worker.
6. What do you mean by effective date?
- If the goods are sent to the job worker from the principal’s premises
- Effective date = date when goods are sent out.
- If the goods are directly despatched to the job worker’s premises
- Effective date = date of receipt of goods by the job worker.
7. Can the time limit within which the goods should be returned be extended?
- The period of 1 year and 3 years (in respect of inputs and capital goods respectively) can be extended by the Commissioner for a further period not exceeding 1 and 2 years (in respect of inputs and capital goods respectively).
8. What is the consequence of not receiving the goods within the prescribed time limit?
- If the goods are not returned within the prescribed time limit, the goods sent to the job worker will be considered as deemed supply from the effective date. (Refer FAQ 6 for effective date)
- The principal manufacturer is required to pay GST on such deemed supply.
9. Can ITC be availed on goods sent to a job worker?
- Yes, ITC can be availed by the principal on the inputs and capital goods sent by him to the job worker.
- ITC can also be availed by the principal if inputs and capital goods are directly sent to the premises of the job worker.
10. Can a principal send intermediate products to a job worker without charging GST?
- Intermediate products are goods/products on which the principal carries out any process before sending it out to the job worker.
- Intermediate products are also considered as inputs and hence the provisions mentioned above will also apply to intermediate products sent to the job worker.
11. What is the tax treatment with respect to the waste generated during the course of the job work?
- If the job worker is a registered taxable person,
- The Waste generated can be cleared by the job worker on payment of GST. (I.e. the supply of waste materials will attract GST and the job worker will charge GST during the sale of such waste materials)
- If the job worker is not a registered taxable person,
- The waste shall be cleared by the principal on payment of GST (I.e. the supply of waste materials will attract GST and the principal will charge GST during the sale of such waste materials).
12. What is Form ITC-04?
- Form ITC-04 is a quarterly statement of records to be filed by the principal relating to the goods sent to a job worker, goods received from a job worker or goods sent from one job worker to another job worker during the quarter.
- Form ITC -04 can also be regarded as a consolidation of all the delivery challans under which goods are sent to a job worker during the quarter.
13. What is the due date of Form GST ITC-04?
- If the annual aggregate turnover of the principal exceeds Rs.5 crores.
- Form ITC 04 shall be filed on a Half yearly basis
- April – September – 25th October
- October – March – 25th April
- If the annual aggregate turnover of the principal is upto Rs.5 crores.
- Form ITC 04 shall be filed on an annual basis on/before 25th April
14. What is the procedure of sending goods from one job worker to another job worker as per section 45 of CGST Rules?
- Goods can be moved under a delivery challan by a principal or a job worker.
- Challan issued by the principal can be endorsed by the job worker sending the goods to another job worker indicating therein the quantity and description of goods being sent. (Same process can be followed for subsequent movement of goods to another job worker).
- Goods transferred by one job worker to another job worker should also be included in the ITC-04 to be filed by the principal.
15. Can the goods be moved from one job worker to another job worker without payment of tax?
- In case the goods are moved from one job worker to another job worker by way of endorsement of delivery challan issued by the principal. No tax needs to be charged
- However, the goods should be returned to the principal within the prescribed time limit.
16. Who is responsible for maintenance of records relating to job work?
It is the responsibility of the principal to maintain proper records relating to goods sent on job work.
17. Other points to note:
- The above provisions are applicable only to a registered taxable person, i.e. the principal can send goods on job work without tax only if he is a registered taxable person.