Job Work under GST

Job-work is any treatment or process undertaken by a person on goods belonging to another registered person

Conditions for Job Work under GST

  1. Job work must be carried out on goods that are received from a registered person and are intended for supply.
  2. Job work must also be done at a place that is separate from the place of business of the registered person.
  3. Job worker must not use the processed goods for any purpose other than returning them to the registered person.

Job Work Procedure under GST

The procedure for carrying out job work under GST is as follows:

  1. Principal must obtain a GST registration.
  2. Principal must issue a job work authorization letter to the job worker.
  3. Principal can send inputs/capital goods under intimation and subject to certain conditions without payment of tax to a job-worker and from there to another job-worker and after completion of Job-work bring back such goods without payment of tax. The principal is not required to reverse the ITC availed on inputs or capital goods sent to job-worker.
  4. Principal can send inputs or capital goods directly to the job-worker without bringing them to his premises, still the principal can avail the ITC of tax paid on such inputs or capital goods.
  5. However, inputs and/or capital goods sent to a job worker are required to be returned to the principal within 1 year and 3 years, respectively, from the date of sending such goods to the job-worker
  6. After processing of goods, the job-worker may clear the goods to
  7. The facility of supply of goods by principal to the third party directly from the premises of the job-worker on payment of tax in India. With or without payment of tax for export may be availed by the principal on declaring premises of the job-worker as his additional place of business in registration.
  8. Before supply of goods to job-worker, principal would be required to intimate the Jurisdictional Officer containing the details of description of inputs intended to be sent by the principal and the nature of processing to be carried out by the job-worker. The said intimation shall also contain the details of another job-worker, if any.
  9. The inputs or capital goods shall be sent to the job-worker under the cover of a challan issued by the principal. The challan shall be issued even for the inputs or capital goods sent directly to the job-worker.

Input Tax credit on goods supplied to job worker:

  1. Principal shall be entitled to take the credit of input tax paid on inputs sent to the job- worker. Further, the proviso also provides that the principal can take the credit even when the goods have been directly supplied to the job-worker without bringing into the premises of the principal. The principal need not wait till the inputs are first brought to his place of business for availing ITC.
  2. Where certain process is carried out on the inputs before removal of the same to the job-worker, such product after carrying out the process to be referred as the intermediate product. Such intermediate product can also be removed without the payment of tax. Therefore, both inputs and intermediate product can be cleared without payment of tax to job-worker.

Time Limits for return of processed goods:

Inputs and capital goods after processing shall be returned back to principal within one year or three years respectively. Further, the provision 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.

Waste clearing by Job Worker

Waste generated at the premises of the job-worker may be supplied directly by the registered job-worker from his place of business on payment of tax or such waste may be cleared by the principal, in case the job-worker is not registered.