Job work under GST – Form GST ITC-04
A complete guide on Job work under GST
Hello, in this post we will give you a detailed understanding of Job work under GST – Form GST ITC-04. Where we will take a close look at each section in detail:
- What is GST ITC-04?
- Input Tax credit on Job work
- Time limit of receiving back goods
- Sale of goods directly from the job worker’s place
- Items on which time limit are not applicable
- Documents for goods being sent
- Form ITC-04 & due date
- Transitional Provisions For Job-work Under CGST
- What are the details to be furnished in ITC -04 under GST?
- Summary of conditions for claiming ITC
- The Responsibilities Lie With The Principal
- Special provisions for Job worker & Filing
- Credit On Input Tax Paid On Goods Supplied To Job-worker
- Guide to GST Portal for filing 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.
The job work under GST is any treatment/process taken by a person on goods belonging to another registered person. The person doing the job work is called job worker.
For instance, shoe manufacturers (principal) sends 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. As a result, the finished goods can also 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 can take credit of tax paid on the purchase of goods sent to job work. However, there are certain conditions:
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 sent from the principal manufacturer then the date of goods sent will be the effective date.
- If the goods are 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:
- Capital Goods – Three years from the effective date.
- Input Goods – One year from the effective date.
In case the goods are not received within the specified period, 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 when the principal declares it as an 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 the job worker’s place.
Items on which time limit are not applicable
The time limits is not applicable to certain machinery sent to the job worker to carry out the job work. It includes moulds and dies, jigs and fixtures, or tools sent out to carry out the job work.
Accompanying documents for goods being sent
Accounts & records of goods
It is the responsibility of the principal manufacturer to keep proper accounts for the inputs or capital goods.
Challan
- A challan is necessary for all goods sent for job work.
- The principal manufacturer will issue the challan.
- It also issued for the inputs or capital goods sent directly to the job-worker.
- The details of challans are shown in FORM GSTR-1.
- Challan details are then filed through FORM GST ITC–04.
The challan issued must include the following:
- Date and number of delivery challan.
- Name, address, and GSTIN of the consigner and consignee.
- HSN code, description, and quantity of goods.
- Taxable value, tax rate, tax amount – CGST, SGST, IGST, UTGST separately.
- Place of supply and signature.
Form ITC-04 / Due date
FORM GST ITC-04 must be submitted by the principal manufacturer in every quarter. It includes 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.
Transitional Provisions For Job-work Under CGST
GST transitional provisions determine whether goods and services being processed or under-processed before or on the GST day will be covered under GST or not.
Cases which exempt the Principal from paying tax:
- According to Central Excise law, if inputs or partially worked inputs are supplied to a job-worker for processing before the introduction of GST and the goods are returned to the principal’s premises within six months of the appointed day of GST, then no tax is due on such goods.
- Input tax credit may be claimed if the goods are not returned as of 31st December 2017.
- If the Principal provided the job-worker with the goods or inputs, and the goods were withdrawn within six months of July 1st, all such suppliers are not required to pay tax, but are obliged to provide the GST. 90 days after the
- introduction of the GST, submit a TRAN-1 form.
Details to be furnished in Form GST ITC-04 for job work
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 a 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 here.
Summary of ITC on goods sent for job work
The principal manufacturer is allowed to take credit of tax paid on the purchase of goods sent on job work.
However, there are certain conditions.
- 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 cases.
- 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 the 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)
- The goods sent must be received back by the principal manufacture within the following period:
- Capital Goods – Three years from the effective date.
- Input Goods – One year from the effective date.
- In case goods are not received back within a certain period, it is treated as supply from the effective date and tax will be payable by the principal.
The Responsibilities Lie With The Principal
- Maintaining the input and capital goods accounts
- The Principal provides the job-worker with the challan (as described in rule 10 of the GST invoicing rules) for the inputs or capital goods.
- Inform the jurisdictional official of the expected input goods and the type of processing being provided by the job-worker.
- Declare the location of the job-business workers as an additional location if the items are exported to a third party directly and the job-worker is not registered for GST.
Special provisions for Job worker & Filing
Job workers who send goods to others are subject to the same conditions as principal manufacturers. As a result, when sending goods to another worker, the job worker can endorse the challan issued by the principal with the quantity and description of the goods.
In the same way as other taxpayers, the job worker must file GSTR-1 and GSTR-3B.
Credit On Input Tax Paid On Goods Supplied To Job-workers
According to the CGST act, the Principal supplies capital goods or inputs to the job-worker for processing and is responsible for paying the input tax.. Therefore, the Principal should receive credit for input tax paid on such goods.
The law compensates the business owner if goods are sent directly to a job-worker and not taken to the business premises before applying for the credit.
Guide to GST Portal for filing ITC-04
Here is a step-by-step instruction to file on the GST portal
1: Log in to the GST Portal
2: Services > Returns > ITC Forms
3: Upload invoices by going to “Prepare Offline.”
4: Once the invoices have been uploaded, select “Initiate Filing.”
5: select tax period.
6: Verify the tax rate and other information.
7: Finally, submit the return to DSC or EVC, as required.
With that, we have come to the end of this post on Job work under GST. If you have any question drop them below in our comment section.
