Section 2 (68) of the Central Goods and Service Tax Act 2016 (“CGST Act”) defines Job Work as “job work” that means any treatment or
process undertaken by a person on goods belonging to another registered person.
The one who does the said job would be termed as ‘job worker’. The job worker is required to carry out the process specified by the principal, on the goods.
Registration
Where a job worker provides service of value greater than Rs. 20 lakh, he is required to register under section 22 of CGST Act 2017. To avail of the benefits under GST, a job worker may also voluntarily register
as provided under section 25(3) of CGST Act 2017. When there is an inter-State supply of goods or services, registration under GST is mandatory. However, the government has provided an exemption from registration for job workers making the inter-state supply of services unless they are covered under the following:
Job worker is registered under GST voluntarily/ or is registered as limit of 20 lakh is crossed, or;
Job worker provides services in relation to goods such as – Jewellery, goldsmiths and
silversmiths wares and other articles of Chapter 71 of Customs Tariff.
Intimation of job work activity and, sending of inputs, semi-finished goods or capital goods for job work
A registered person [i.e. Principal] who intends to supply goods for job work shall first file an intimation letter with the jurisdictional tax office and inform them about activity it proposed to undertake.
Principal can send out inputs, semi-finished goods or capital goods without payment of duty, under the cover of challan that should contain the details
as required to be specified under Rule 55 of the Central Goods and Services Tax Rules, 2017 (“the CGST Rules”).
The responsibility of keeping the accounts and records for goods sent to job work is of principal.
Documents required for sending goods for job work.
Sr. No.
Particulars
Document Required.
1
Sending goods by principal to the job worker
Delivery Challan in triplicate;Two copies of challan to be sent to a job workerOne copy to be kept for record purposeE-way Bill
2
Return of goods by Job Worker to Principal
One copy of delivery challan endorsed by the job workerJob Workers invoice for job work activity Basis the job workers invoice and subject to fulfilment of conditions in Section 16 read with Section 17(5) of the CGST Act, 2017, SPTL can avail the Input Tax Credit on availment of job work services from said job worker E-way Bill
Compliance
The details of challans in respect of goods dispatched to a job worker or received from a job worker or sent from one job worker to another during a quarter shall be included in FORM GST ITC-04 furnished for that period on or before the twenty-fifth day of the month succeeding the said quarter.
Details of delivery challan generated by the principal for the job work are also required to be furnished in Form GSTR-1
(Return of Details of outward supplies of goods or services.
E-Way Bill is required to be generated before movement of goods by the Principal to the Job Worker or
by the registered Job Worker to the Principal or to the another Job Worker.
Duration for which goods can be kept with the job worker
Following is the duration prescribed within which such inputs or capital goods (Other than mould and dies, jigs and fixtures, or tools) must be either returned to principal registered person or cleared on payment of tax within India or
cleared for Export from the premises of Job worker itself:
Inputs
One year
Capital goods (Other than mould and dies, jigs and fixtures, or tools)
Three years
In a case where the inputs/ capital goods (Other than mould and dies, jigs and fixtures, or tools) are not returned or cleared in stipulated time the same would deemed to have been supplied on the day on which the same were cleared by principal registered person for job work and the job work challan issued at the time of such clearance shall be treated as an Invoice. Note that such supply shall be declared in Form GSTR-1 and
the principal shall be liable to pay the tax along with applicable interest.
The Waste and Scrap can be supplied by the job worker directly from his place of business, on payment of appropriate tax applicable on the said waste / scrap, if the job worker is registered. In case he is not registered, then the waste / scrap generated should be returned to the principal.
Availment of Input Tax Credit (“ITC”) on goods sent for job work
According to Section 19(2) of CGST Act, the principal can avail the ITC where goods are sent to job worker premises directly from the vendor location without coming to the principal’s premises. Principal can avail ITC on such goods sent to job worker, provided the vendor mentions -customer as the principal and consignee
as the job worker on the face of the invoice. In case of goods imported and directly sent to the job worker from the custom station, the principal requires
to raise a delivery challan under Rule 55. Note principal would be eligible for the ITC on imported goods.
GST Rates on Job work
It is recommended to Job Workers charge 12% GST on supplies made to Registered Principals and
18% GST on supplies made to Unregistered Principals.
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