Job work under GST - Form GST ITC-04

Hello, in this post we will give you a detailed understanding of Job work under GST – Form GST ITC-04.

What is GST ITC-04 – job work under GST?

Job work means processing on raw materials or semi-finished goods supplied by the principal manufacturer to the job worker. This is to complete a part or whole of the process which results in the manufacture or finishing of an article or any other essential operation.

As per the GST Act, job work under GST means any treatment or process undertaken by a person on goods belonging to another registered person. The person doing the job work is called job worker.

For example, big shoe manufacturers (principal) send out the half-made shoes (upper part) to smaller manufacturers (job worker) to fit in the soles. The job workers send back the shoes to the principal manufacturer.

The goods sent for job work can be raw material, component parts, semi-finished goods. The finished goods can be a variation of the same or a complete product.

Note: Value of goods sent by the principal will not be included in the aggregate turnover of the registered job worker.

Input Tax Credit on job work

The principal manufacturer is allowed to take credit of tax paid on the purchase of goods sent to job work. However, there are certain conditions for such credit.

Place of business

ITC is allowed:

  • when the goods are sent from the principal manufacturer to the job work
  • When goods are directly sent the seller of the goods to the job worker without going to the principal manufacturer place

Effective date

The effective date for the claim of ITC is based on the below condition:

  • If the goods are being sent from the principal manufacturer then the date of goods sent will be the effective date
  • If the goods are being sent directly from the seller then the date of receipt of goods at the job worker will be the effective date.

Time limit for receiving back the goods

The principal manufacturer must receive the goods back within the following period:

  1. Capital Goods – Three years from the effective date
  2. Input Goods – One year from the effective date

In case the goods are not received within the specified period as mentioned above, such goods will be deemed as supply from the effective date. Then, the principal manufacturer will have to pay tax will on such deemed supply.

The challan issued during the transfer of goods will be treated as an invoice for such supply.

Sale of goods directly from the job worker’s place

The principal manufacturer can supply the goods from the place of business of a job worker only if the principal declares such place of business as the additional place of business.

This rule does not apply in the following conditions;

  • The job worker is registered
  • The principal supplies goods which are specifically notified by the Commissioner to be allowed to sell directly from job worker’s place

Items on which time limit are not applicable

The time limits will not apply to certain machinery sent to the job worker to carry out the job work. These include items like molds and dies, jigs and fixtures, or tools sent out to a job worker for carrying out the job work.

Accompanying documents for goods being sent

Accounts & records of goods

The responsibility for keeping proper accounts for the inputs or capital goods shall be that of the principal manufacturer.

Challan

  • All goods sent for job work must be accompanied by a challan.
  • The challan will be issued by the principal manufacturer.
  • It will be issued even for the inputs or capital goods sent directly to the job-worker.
  • The details of challans must be shown in FORM GSTR-1.
  • Details of challans must also be filed through Form GST ITC–04.

The challan issued must include the following particulars:

  1. Date and number of the delivery challan
  2. Name, address, and GSTIN of the consigner and consignee
  3. HSN code, description, and quantity of goods
  4. Taxable value, tax rate, tax amount – CGST, SGST, IGST, UTGST separately
  5. Place of supply and signature

GST Rates on Job work

Job Work on GST Rate
Agriculture, forestry, fishing, animal husbandry 0%
Intermediary services related to cultivation and animal rearing 0%
a) Printing of newspapers 5%
b) Textile and textile products
c) Jewelry
d) Printing of books (including Braille books), journals and periodicals
e) Processing of hides, skins, and leather

Form ITC-04

FORM GST ITC-04 must be submitted by the principal manufacturer every quarter. This should include the details of challans in respect of the following-

  • Goods dispatched to a job worker or
  • Received from a job worker or
  • Sent from one job worker to another

Due date of FORM GST ITC-04

ITC-04 is filed quarterly. It must be furnished on or before 25th of the month succeeding the quarter.

For example, for the quarter Oct-Dec, the due date is 25th Jan.

Details to be furnished in Form GST ITC-04

There are 2 parts in Form GST ITC-04-

  • Goods sent to the job worker
  • Goods received back from the job worker

Details of inputs/capital goods sent for job-work

Details such as GSTIN, challan number, tax amount etc are to be mentioned. All details will be available from the challans.

Goods received back from job worker or sent out from the business place of job-work

The details of goods received back from the job work will be mentioned here. The goods may be received by the principal or sent to another job worker directly from the first job worker’s place of business.

All details of original challans and new challans must be mentioned in this part.

Summary of ITC on goods sent for job work

The principal manufacturer will be allowed to take credit of tax paid on the purchase of goods sent on job work.

However, there are certain conditions.

    1. Goods can be sent to the job worker:
      • From the principal’s place of business
      • Directly from the place of supply of the supplier of such goods

ITC will be allowed in both the cases.

    1. The effective date for goods sent depends on the place of business:
      • Sent from principal’s place of business- Date of goods sent out
      • Send directly from the place of supply of the supplier of such goods- Date of receipt by job worker

The effective date is important because it will help to determine the point of taxation if the goods are not returned back within the specified time (see below point)

  1. The goods sent must be received back by the principal manufacture within the following period:
    1. Capital Goods – Three years from the effective date
    2. Input Goods – One year from the effective date
  2. In case goods are not received back within the period mentioned above, such goods will be treated as supply from the effective date and tax will be payable by the principal.
Share On:

One thought on “Job work under GST – Form GST ITC-04

  1. The above blog is written is very useful for those who all are working on raw material, component parts, semi-finished goods.but I have a question that What is a reverse-charge on job work under GST ?

Leave a Reply

Your email address will not be published. Required fields are marked *