🔹 Introduction

Job work is a vital part of industries like textiles, automobiles, and electronics where raw materials or semi-finished goods are sent to third parties for further processing. GST law specifically recognizes job work to ensure seamless flow of ITC and tax neutrality.

(Reference: Sec. 143 of CGST Act, Rule 45–55 of CGST Rules, CBIC Circulars till 2025)

🔹 Concept of Job Work

• Definition (Sec. 2(68)): Job work means any treatment or process undertaken by a person on goods belonging to another registered person.

• The person doing the work = Job Worker.

• The person supplying goods = Principal.

🔹 ITC Treatment on Goods Sent for Job Work

• Principal can avail ITC on inputs/capital goods sent to job worker.

• ITC allowed even if goods are sent directly to job worker without first coming to principal’s premises.

🔹 Time Limits for Return of Goods

• Inputs: Must be returned within 1 year from date of sending.

• Capital Goods: Must be returned within 3 years.

• If not returned within time → Deemed as supply from principal to job worker on expiry date → GST payable.

🔹 Reporting Requirements – ITC-04

• Principal must file Form GST ITC-04:

  • Details of goods sent to job worker.

  • Goods received back.

  • Goods supplied directly from job worker’s premises.

• Filing frequency: Half-yearly (for turnover ≤ ₹5 crore) or quarterly (for turnover > ₹5 crore).

🔹 Taxability of Job Work Charges

• Job worker must issue tax invoice for services rendered.

• GST rate: 18% (SAC 9988 – manufacturing services) unless specifically notified at lower rate.

• Principal eligible to claim ITC on such charges.

🔹 Practical Examples

Example 1: Manufacturer in Noida
Sends raw material worth ₹50 lakh to job worker in Delhi. Goods returned within 8 months. No GST payable on movement. Job worker charges ₹5 lakh + GST @18%. Principal takes ITC on GST charged.

Example 2: Textile Industry Case
Garment manufacturer sends fabric for dyeing. Job worker charges ₹1 lakh + GST. Principal claims ITC. If fabric not returned within 1 year, treated as deemed supply.

Example 3: Direct Supply from Job Worker’s Premises
Principal can supply goods directly from job worker’s premises if declared as additional place of business in GST registration.

🔹 Common Mistakes

• Not filing ITC-04 timely.

• Failing to track return deadlines of inputs/capital goods.

• Not declaring job worker’s premises in GST registration.

• Wrongly paying GST on goods sent to job worker (not required if within limits).

🔹 Penalties

• Non-return of goods → Tax liability + interest + penalty under Sec. 74A (from FY 2024-25).

• Non-filing of ITC-04 → Late fee ₹50/day (₹25 CGST + ₹25 SGST).

• Wrong ITC claim → Reversal with interest u/s 50.

🔹 Best Practices

• ✅ Maintain detailed job work register.

• ✅ Use ERP/software to track due dates.

• ✅ File ITC-04 on time.

• ✅ Enter into agreements with job workers for accountability.

• ✅ Verify GST registration & invoices of job workers.

🔹 FAQs

Q1. Is GST payable when goods sent to job worker?
➡️ No, if returned within time limits.

Q2. Can goods be sent directly to job worker without going to principal?
➡️ Yes, allowed.

Q3. What if goods not returned within 1/3 years?
➡️ Deemed supply → GST payable by principal.

Q4. Is ITC available on job work charges?
➡️ Yes, principal can claim ITC.

Q5. Is ITC-04 mandatory for all?
➡️ Yes, for all principals sending goods to job workers.

🔹 Conclusion

Job work under GST allows manufacturers to outsource processes without losing ITC benefits. Timely return of goods, proper ITC-04 filing, and correct invoicing ensure smooth compliance and prevent tax liability.

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