Job work provisions under GST
Hi Readers! In this article we analysis Job work provisions under GST. Before starting, we should have a basis idea about the nature of business which come under the definition of Job work.
Definition of Job work: – Job work has been defined under section 2(268) of CGST Act. According to Act, Job work mean any treatment or process undertaken by a person on goods belonging to another registered person. The person who done the above activity is called Job worker.
In the above definition it’s clear that principal must be a registered person. In case if job worker done any process or treatment for unregistered person then it will not be considered as job work.
Now question will be arise that if one activity is not classified as job work then what will be consequence for the same. In that case the activity may be classified as residual category of service which may attract higher rate of tax. We will further discuss the GST rates on job work in this article.
Job work Procedure: – Section 143 of CGST Act prescribed the following procedure related to job work.
1. A registered principal can send any inputs or capital goods to job worker without payment of GST. The said inputs or capital goods to be send under the cover of delivery challan.
2. Registered person can send the inputs or capital goods from one job worker to another job worker without receiving the same at his premises.
3. Registered person can also send goods directly to the premised of job worker without first receiving the same at his premises. Principal can still avail the Input tax credit on the such inputs or capital goods.
4. Inputs / Capital goods send to job worker can be received back within one year for inputs and three year for capital goods without payment of GST. The inputs or capital goods can be received at any of the place of business of the principal.
5. However, the period of one year for inputs or three year for capital goods may be extended by commissioner for a further period not exceeding one year in case of inputs and two year in case of capital goods on sufficient cause being shown. Extension of time is covering the situation where period specified is not adequate in respect of job works.
6. In case the inputs or capital goods are sent directly to a job worker, the period of one year or three shall be counted from the date of receipt of inputs by the job worker.
7. In case of inputs or capital goods further move from one job worker to another job worker then period of one year or three year shall be considered the entire process of job work.
8. In case, inputs or capital goods are not received within one year or three year respectively then the same will be treated as supply and registered person have to pay tax with application interest. In this case time of supply will be date on which the inputs were sent out to job worker.
9. A registered person can send moulds and dies, jigs and fixtures or tools for job work purpose without payment of GST. The time limit of one year or three year of receiving back the said goods will not apply to moulds and dies, jigs and fixtures or tools.
10. The responsibility of sending the goods for job work as well as bringing them back or supplying them has been cast on the principal.
11. If Job worker returned the inputs or capital goods to principal after the stipulated time period then return of inputs or capital goods will be treated as a fresh supply by job worker. For this type of supply job worker would be liable to pay GST if he is registered or liable to registered under the act and rules made there under.
Supply of goods from job worker’s premises: – After processing of goods, Job worker can return the processed goods to principal under the cover of delivery challan. However, principal also have the option to clear the goods directly from the premises of job worker on payment of tax within India or without payment of tax for export outside India on certain conditions.
The facility for supply of goods by principal from job worker’s premises can be availed only if principal declare the premises of job-worker as his additional place of business in registration. However, the said declaration is not required in respect of following cases: –
- Job worker is registered under section 25 or
- Principal is engaged in supply of notified goods.
In case of supply of goods from job worker’s premises following point to kept in mind by principal: –
1. The supply of goods will be regarded as supply by the principal and not by the job worker and invoice would have to be issued by the principal.
2. Responsibility of keeping proper accounts for inputs or capital goods lies with the principal.
3. The time, value and place of supply would have to be determined in the hands of the principal irrespective of the location of the job worker’s place of business.
4. The above principal would apply the same in case of supply of waste and scrap generated during the job work.
Job worker GST Registration: – If aggregate turnover of a Job worker in a financial year exceeds the specified threshold limit (Rs 20 Lakh or Rs 10 Lakh in case of special category states of Mizoram, Tripura, Manipur and Nagaland) then Job worker shall be liable for registration under GST.
In respect of Job worker, the aggregate turnover does not include the value of goods supply by principal from the job worker’s place of business. The turnover will be included in the aggregate turnover of the principal and not job worker. [Explanation (ii) to Section 22 of CGST Act, 2017].
GST rates on Job work: –
| S.No. | Heading | Nature of Job work Services | Tax Rate – IGST / (CGST+SGST) |
| (i) | 9986 | Job work in case of Agriculture, hunting, forestry, fishing, mining and utilities. | 0% |
| Job work Services by way of pre-conditioning, pre-cooling, ripening, waxing, retail packing, labelling of fruits and vegetables which do not change or alter the essential characteristics of the said fruits or vegetables. | 0% | ||
| Job work services by carrying out an intermediate production process as job work in relation to cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products or agricultural produce. | 0% | ||
| (ia) | 9988 | Job work in case of Printing of Newspapers | 5% |
| Job work in case of textiles and Textile products falling under chapter 50 to 63 | 5% | ||
| Job work in case of precious and semi-precious stones, or plain and studded jewellery of gold and other precious metals, falling under Chapter 71 of HSN | 5% | ||
| Printing of all goods falling under chapter 48 or 49 which attract GST @ 5% | |||
| Job work in case of Printing of books (including braille books), journals and periodicals | 5% | ||
| Job Work in case of processing of hides, skins and Leather falling under chapter 42 or 64 | 5% | ||
| Job work in case of manufacture of clay bricks | 5% | ||
| Job work in case of manufacture of handicraft goods | 5% | ||
| (ib) | 9988 | Job work services by way of job work in relation to diamonds falling under chapter 71 | 1.5% |
| (ic) | 9988 | Job work services for engineering related bus body building. | 18% |
| (id) | 9988 | Services by way of job work other than (i), (ia), (ib) and (ic) above | 12% |
Where job work activity is not specifically covered above then job worker requires to charge GST at the rate of 12% when principal is registered under GST. If Principal is not registered under GST, then Job worker require to charge GST at the rate of 18%. The reason for charging 18% GST rate is that in the definition of Job work, if principal is not registered under GST then treatment or processing of goods does not fall under the category of Job work, hence required to charge higher rate of tax.
GST Return
The principal must submit return in form GST ITC -04 for every quarter in respect of following details.
- Details of inputs / capital goods sent for job work (includes inputs / capital goods directly sent to place of business / premises of job worker)
- Details of inputs / capital goods received back from job worker or sent out from business place of job work
Principal must file Form ITC-04 on or before 25th day of the month following the quarter for which such a Form needs to be filed.
E-way bill Requirements: – In case of Intrastate movement of goods for job work, the E-way bill must be generated by every registered person whose goods value exceeds Rs. 50,000. In case of interstate movement of goods for job work, the E-way bill must be generated irrespective of the value of the consignment. E-way bill may be generated either by the principal or the job worker (if registered).
Also See, “Job work Circular – clarification on some issue – Circular No. 38/12/2018 dated 26.03.2018
Also See, “Change in GST Rate on Job Work – Notification No.- 20/2019-CT (R) Dated: 30 Sep 2019
Also See, “Circular on scope of notification related to Job work – Circular No. 126/45/2019-GST
Also See, “EMI Moratorium Frequently asked question” and “Extension of FTP 2015-2020 for one year”
For any query you can write at taxhouseindia@gmail.com Before making any decisions do consult with your professional or tax advisor.
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