written by | June 7, 2022

Complete Guide to Job Work Under GST in India

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Table of Content


Nowadays, several processors outsource labourers rather than producing each product in-house. This enables processors to complete their tasks more quickly and efficiently. It is also a fantastic source of income for job workers. However, like any other type of work, job work is subject to GST. As a result, one must file a job work return under GST, a standard procedure.

This article will act as a complete guide and cover all aspects of job work in GST, including job work procedures under GST and how to file a GST return for job work. So, without wasting any time, let's jump into the article.

Did you know?

Job work is defined as "any treatment or process conducted by a person on goods belonging to another registered person" under Section 2(68) of the CGST Act, 2017. The person who does the task is referred to as a 'job worker.' The commodities do not pass to the job worker; instead, the principal retains possession.

Also Read: Meaning and Scope of Supply under GST

What is Job Work Under GST?

"Any procedure or process carried out by a person with another registrant" defines job work under GST. Hence, a job-worker is defined as anybody who may be registered or not registered who practises or treats another registered person's goods.

Furthermore, Section 19 of the Central Products and Services Act of 2017 describes the main as "a person providing assistance to the job-worker."

A job can have several advantages. It can lower your operational costs, provide access to adequate facilities, boost work efficiency, improve manufacturing concentration, and many other benefits.

Responsibility Lies within the Principal

There are several commitments with the main in job work GST, which are as follows: 

  • The Primary Concern is the challan to the worker on the job for the input data or funds equipment (as specified in rule 10 of the GST statement rules).
  • Keeping track of input and the fund's equipment accounts.
  • Inform the intended input goods' jurisdictional officer and the nature of the handling provided by the job employer.
  • Declare the job-premise workers as a supplementary business place if the goods are exported directly to a third party and the job-employer is not enrolled under GST.

Time Constraints For Returning the Processed Goods to the Holder

There are time constraints given to a job worker under GST for rebounding filtered goods to the holder.

The provision of inputs to the job employee must be returned to the chief within the year, starting from the receipt. In terms of the capital goods processing, the deadline for rebounding the production of goods within the holder's premises is 3 years.

Except for the supply of capital goods or inputs, all tools, fixings, moulds, or dies or jigs provided by the main to the job employer are not protected under the rebounding norms under Section 19 of the Central GST Act, 2017.

Job Work GST Rate

The rate of GST on job work is as follows.

  • The GST council has decreased the tax rate on engineering work from 18% to 12% 
  • Diamond supply work is subject to a 1.5% GST rate, down by 5%

Also, in the most updated GST circular of 2019, it was clearly stated that all enrolled taxpayers under job work would be charged 12% GST, while unregistered taxpayers would be charged 18% GST.

Moreover, one initially needs to know their job work under GST. In general, GST valuation would be the transaction value, and such cost would be considered the sole consideration for GST purposes. Although in practice, many expenses are borne on the behest of the job worker by the main.

Credit on Input Tax Paid on Goods Supplied To Job-Worker

 

The company is responsible for paying the input tax on capital goods or inputs supplied to the job-employer under the Central GST Act. As a result, the company should claim solvency for the input tax paid on such a product.

Suppose the products are sent straight to the job employer without being taken to the business's premises. In that case, the law needs to compensate the holder for trying to apply for credit without any wait until the inputs arrive.

Also Read: What Are Interstate GST and Intrastate Supply Under GST?

Procedure to Claim Input Credit of the Tax on Job Work

The procedure for claiming the input tax solvency for job work under GST is described below.

  • Bought goods can be delivered to the job employee in several ways; let's understand the job work procedure under GST.
  • Directly from the main place of the company
  • From the supplier of such goods' supplier

Credit on input tax will be permitted in both of the preceding cases.

  • The location of business determines the productive dates of goods fetched out:

Either goods are sent from the company's central place, or goods are shipped straight away from the supplier's location. In these cases, there is a need for the receiver of the job-date worker.

The goods fetched out should come back to the primary processor within the following time frame:

  • The 3 years for capital goods
  • One year for input goods
  • The effectual dates of goods fetched out or gained by the job worker entirely depend on the business location from which goods are fetched out. 
  • If funds and input goods are not received within three and one years, separately, these products will be regarded as a supply as of the dates specified, and the toll will be levied based on such a decreed supply. The challan will be issued, serving as the statement for this kind of supply.

Restrictions and Rules for Claiming Credit on Input Tax Under Job Work

  • Inputs, half-finished goods, or funds distributed on the job

Goods shipped from the main business place or sent directly from the supplier's supply point must be accompanied by a challan.

The following specific points should be included in the challan:

  • The delivery challan's date and number
  • HSN code, description, and quantity of goods, name, address of the place, and GST registration number of the consignor and consignee
  • Taxable amount, tax rate, Central GST, State GST, Integrated GST, and UTGST separately signature and supply location.

Transitional Provisions For Job Work Under Central GST

Intermediate provisions are intended to determine whether or not products and services filtered or unfiltered before or on the ordained GST days are likely to be covered by GST. The following situations exempt the main from paying the tax:

  • Under main Excise Law, if inputs or half worked inputs are sent to a job-employer for processing before the implementation of service tax and the products are returned to the main premises within six months of No GST is levied on the designated GST day., no tax is charged on such products.
  • If the merchandise is not returned by December 31, 2017, it may be eligible for the Credit on input tax.
  • Suppose the principal supplies the commodities or inputs provided to the worker, and the products are deleted within six months of July 1, in that case, all such materials are exempt from tax but must provide the GST TRAN-1 form after 90 days of GST implementation. 

Conclusion

Job work is an excellent way to make money nowadays because it allows you to work when and how. Like any other type of work, job work is subject to GST and must be reported. 

However, filing GST is a standard procedure that entails the steps that we discussed above. These steps, which the main company can complete, enable you to file job work under GST, and job work return under GST
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FAQs

Q: Are the main goods directly supplied from the job worker's premises included in the job worker's total turnover?

Ans:

No, it will be included in the main total turnover. The value of goods or services used by the job employer to carry out the job work in GST, on the other hand, will be included in the value of the service supplied by the job worker.

Q: Which GST return forms are to be provided for job work?

Ans:

Job work return under GST filing is a requirement for both parties involved in supplying goods (processor and job worker). Forms GST Return 1, GST Return 3B, and so on are filed following their relevance to the process. Furthermore, the main processor must file Credit on Input Tax-4 with all details regarding the resource of goods from the job worker.

Q: Is there any Input Tax available on goods shipped to Job Work in GST?

Ans:

Yes, the main processor can claim Input Tax on input goods/capital goods sent to Job Workers. Even if the goods are transported directly to the job worker's location without passing through the main processor premises, the main processor can claim input tax if the processor includes the supply document.

Q: What are the registration requirements for the main processor and job employers?

Ans:

GST registration is required for both the main processor and the job employers. However, registration is based on several criteria of registration outlined in Sections 22 and 23 of the Regional products and Services Tax Act.

Q: What is Job Work under GST?

Ans:

The work industry is concerned with transforming raw materials or half furnished materials, or intermediate goods into final or consumable products. Raw materials are supplied to the sector by major processors.

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Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.