Gst provisions with respect to job work

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Querist : Anonymous

Querist : Anonymous (Querist)

08 July 2017 What are the compliances and legal provisions under GST with respect to goods sent for Jobwork ? Whether the principal is required to pay tax on goods sent for Job work ?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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08 July 2017 Yes the principal is required to pay tax on goods sent for Job work.
See the link for more information.
http://www.cbec.gov.in/resources//htdocs-cbec/gst/eflier-jobwork22062017.pdf

Querist : Anonymous

Querist : Anonymous (Querist)

08 July 2017 ) A registered person (Principal) can send inputs/
capital goods under intimation and subject to
certain conditions without payment of tax to a
job-worker and from there to another job-worker
and after completion of job-work bring back such
goods without payment of tax. The principal is not
required to reverse the ITC availed on inputs or
capital goods dispatched to job-worker. What will be the implication of this point mentioned in the attached link ???

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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27 July 2024 Under GST, the treatment of goods sent for job work is governed by a set of specific provisions designed to facilitate the smooth functioning of the job work process. Here’s a detailed explanation of the GST provisions and compliance requirements related to job work:

### **1. **GST Provisions for Job Work**

#### **1.1 Definition and Scope**
- **Job Work:** Under GST, job work refers to the processing or working of goods by a job worker on behalf of a principal (the owner of the goods). This includes any activity undertaken on the goods, including processing, manufacturing, and repairs.

#### **1.2 Principal and Job Worker Compliance**
- **Principal’s Role:** The principal is the registered person who sends the goods to the job worker for further processing or treatment.
- **Job Worker’s Role:** The job worker is responsible for performing the required job work on the goods.

### **2. **Sending Goods for Job Work**

#### **2.1 Inputs and Capital Goods**
- **Inputs:** Goods sent for job work as inputs are not subject to GST at the time of dispatch from the principal to the job worker, provided that the principal follows the prescribed conditions.
- **Capital Goods:** The same provision applies to capital goods sent for job work.

#### **2.2 Conditions and Intimation**
- **Intimation:** The principal must inform the job worker about the receipt of goods under GST. The principal should also ensure that the goods are sent under the cover of a delivery challan.
- **Conditions:**
- **Input Goods:** The principal should maintain records and ensure that the job worker returns the processed goods or the waste to the principal.
- **Capital Goods:** The principal can also send capital goods to the job worker under similar conditions.

#### **2.3 No Payment of Tax**
- **Goods Sent for Job Work:** When goods are sent to the job worker, the principal is not required to pay GST at the time of sending the goods. Similarly, the job worker does not charge GST on the processing work performed.

### **3. **Returning Goods from Job Work**

#### **3.1 Returning Goods**
- **Return of Goods:** After the job work is completed, the goods can be returned to the principal without any additional tax being applied at the time of return.

#### **3.2 ITC Implications**
- **Input Tax Credit (ITC):** The principal is not required to reverse the ITC availed on inputs or capital goods sent to the job worker, provided that the goods are returned within the prescribed time limits.
- **Conditions for ITC:** Ensure compliance with the conditions laid down under GST to avail of ITC, including maintaining records and ensuring the return of goods.

### **4. **Legal Provisions and Compliance**

#### **4.1 GST Provisions for Job Work**
- **Section 143 of CGST Act:** This section outlines the provisions related to job work, including the sending of inputs or capital goods to the job worker without payment of tax and the subsequent return of goods.
- **Rule 45 of CGST Rules:** Details the procedure for sending goods to job workers and the documentation required for such transactions.

#### **4.2 Documentation and Records**
- **Delivery Challan:** Goods sent to the job worker should be accompanied by a delivery challan specifying the details of the job work.
- **Record Keeping:** Maintain proper records of all transactions, including the delivery challan and job work invoices.

#### **4.3 Compliance with Conditions**
- **Timely Return:** Ensure that goods are returned within the specified time limits to avoid any issues with ITC claims or GST compliance.
- **Documentation:** Maintain proper documentation to support the job work transactions and to substantiate the claims for ITC.

### **5. **Implications of GST Provisions**

#### **5.1 No Payment of GST at Dispatch**
- **Implication:** The provision that goods can be sent for job work without payment of tax helps in avoiding additional tax burdens on the principal and streamlines the process of job work.
- **Compliance:** Ensure that all conditions are met to benefit from these provisions, including timely return of goods and proper documentation.

#### **5.2 ITC Benefits**
- **Benefit:** The principal can retain the ITC on inputs and capital goods sent for job work, provided the conditions are fulfilled and goods are returned within the specified time limits.

### **Summary**

Under GST, the principal is not required to pay tax when sending goods for job work, provided they comply with the prescribed conditions. The job worker also does not charge GST on the job work performed. The principal can retain the ITC on inputs and capital goods sent for job work, given that the goods are returned within the stipulated timeframe. Proper documentation and adherence to the conditions outlined in Section 143 of the CGST Act and Rule 45 of the CGST Rules are crucial for ensuring compliance and availing of the benefits under GST.