Job work under GST allows a principal manufacturer to send goods (inputs or capital goods) to a job worker for processing without paying GST on the movement. Section 143 prescribes time limits, ITC rules, and delivery challan requirements. ITC-04 declaration is mandatory.
Time Limit: 1 year from date of sending
If not received back within 1 year: deemed supply on the date of sending. GST payable with interest. Value = original transaction value.
Time Limit: 3 years from date of sending
If not received back within 3 years: deemed supply. GST payable on transaction value with interest from date of sending.
Time Limit: No time limit
Exempt from time limit restriction. Can remain with job worker indefinitely without being deemed supply. Principal must maintain records.
Time Limit: 1 year (unless further processed)
If sent for further processing to another job worker: 1-year period continues from original date. Principal must track across multiple job workers.
Principal can claim ITC on inputs sent to job worker — even if inputs are directly sent from supplier to job worker (without coming to principal's premises). Condition: Principal must declare the job worker's premises in GST registration OR furnish details in ITC-04. This was a major relief for manufacturers who send raw materials directly to job workers.
Principal can claim ITC on capital goods sent for job work. Time limit: capital goods must be received back within 3 years. ITC allowed even if capital goods are directly delivered from supplier to job worker's premises.
Principal must file Form ITC-04 declaring: goods sent to job worker, goods received back, goods sent directly from job worker to customer. Filing frequency: quarterly for turnover > ₹5 Cr, half-yearly for others. Failure to file: ITC may be questioned during audit.
Job worker charges GST on processing charges (service invoice). Job worker can claim ITC on inputs/tools used for providing the job work service. Important: job worker claims ITC on their own inputs — NOT on the principal's goods (which belong to principal and are tracked via ITC-04).
Job worker charges 12% or 18% GST on processing charges
Invoice: Job worker issues tax invoice for processing service. HSN/SAC: 9988 (Manufacturing services on physical inputs). Principal's goods: no GST (sent on delivery challan, not invoice).
ITC: Principal claims ITC on job work charges. Principal retains ITC on own inputs sent for job work.
Principal issues invoice to end customer (with full GST on goods)
Invoice: Principal issues tax invoice (since principal is the 'supplier'). Job worker: issues delivery challan to ship goods to customer. No separate GST by job worker for goods (only processing charges if applicable).
ITC: Principal claims ITC on inputs and job work charges. Customer claims ITC on invoice from principal.
If job worker supplies waste/scrap: GST payable by the person who supplies it (principal or job worker)
Invoice: If principal asks job worker to sell scrap: job worker charges GST (if registered). If principal takes back scrap and sells: principal charges GST.
ITC: ITC implications depend on who supplies the scrap. Scrap value must be reported in GSTR-1.
Zero-rated supply if principal exports finished goods. Processing charges: standard GST (not zero-rated — job work service is domestic).
Invoice: Principal: export invoice with zero-rated supply. Job worker: regular tax invoice for processing charges (domestic supply of service).
ITC: Principal claims refund on accumulated ITC (export without IGST payment under LUT). Job work charges: ITC available to principal.
Job work (Section 2(68) of CGST Act) means any treatment or process undertaken by a person (job worker) on goods belonging to another person (principal). The principal retains ownership of the goods throughout. Examples: fabric sent for dyeing, steel sent for machining, chips sent for assembly. The job worker provides a 'service' (processing) and charges GST on processing fees. The goods themselves belong to the principal and move on delivery challan (not tax invoice).
Job workers with turnover below threshold (₹20 lakh for services) are NOT required to register for GST — even if they receive goods from registered principals. Exception: if job worker is engaged in making goods notified under Section 143(1)(b) — jewellery, precious metals, precious stones — they MUST be registered regardless of turnover. In practice: most job workers register voluntarily to claim ITC on their input costs.
Form ITC-04 is a quarterly/half-yearly declaration that the principal must file declaring: (1) Goods sent to job worker, (2) Goods received back from job worker, (3) Goods sent to another job worker, (4) Goods supplied directly from job worker's premises. Filing frequency: quarterly (Jan-Mar, Apr-Jun, Jul-Sep, Oct-Dec) if turnover > ₹5 Cr, half-yearly (Apr-Sep, Oct-Mar) for others. Due date: 25th of month following the period. Non-filing: ITC may be questioned.
Section 143(1): If goods not returned within time limit (1 year for inputs, 3 years for capital goods), it's deemed that the principal has supplied those goods to the job worker on the date they were originally sent. Consequences: (1) GST becomes payable on the value of goods + interest from date of sending, (2) Principal must declare this in the return for the period when time limit expires, (3) Job worker may need to take registration if receiving such deemed supplies. Exemption: moulds/dies/jigs/fixtures have no time limit.
Yes. Section 143(1) allows the principal to send goods to job worker from: (a) principal's own premises, (b) any other premises, including directly from the supplier's premises. The principal can claim ITC even if inputs go directly from supplier to job worker — provided: (1) delivery challan is maintained by principal, (2) details declared in ITC-04, (3) principal's premises or job worker's premises are declared in GST registration. This is very common in manufacturing supply chains.
Delivery challans, time limit alerts, ITC-04 auto-filing, and complete job work register with real-time tracking.
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