Job work
This query is : Resolved
21 June 2017
Dear All,
Please share how to proceed job work process in GST regime. We manufacture nut, Bolts & fasteners for Maruti, Hero & Honda etc.
Thanks in advance
RAJESH SEHGAL
Please share how to proceed job work process in GST regime. We manufacture nut, Bolts & fasteners for Maruti, Hero & Honda etc.
Thanks in advance
RAJESH SEHGAL
22 June 2017
please reply, either job worker register under GST or not.
02 August 2024
In the GST regime, the job work process involves several steps and compliance requirements. Here's a step-by-step guide to handling job work under GST for manufacturers like yourself:
### **1. **Understanding Job Work under GST**
Under GST, job work refers to processing or working on goods owned by someone else, typically on a contract basis. The principal (the person sending the goods) and the job worker (the person performing the job) both have specific obligations under the GST law.
### **2. **Principal and Job Worker Registration**
- **Principal:** The principal must be registered under GST.
- **Job Worker:** The job worker should be registered if their aggregate turnover exceeds ₹20 lakhs (₹10 lakhs for special category states). If the turnover is below this threshold, registration is optional.
### **3. **Documents and Compliance for Job Work**
**a. **Sending Goods to Job Worker:**
- **Challan for Job Work:** When sending goods to a job worker, the principal needs to issue a **Delivery Challan**. This should be in the prescribed format and include details such as the GSTIN of the job worker, description of goods, quantity, and value.
- **Intimation:** The principal must also send an intimation to the GST department about the job work. This is done through the **GSTR-1** return.
**b. **Receiving Goods after Job Work:**
- **Goods Receipt:** Upon completion of job work, the job worker must issue a **Delivery Challan** or a **Tax Invoice** if they are registered. This should mention the principal's GSTIN and the details of the job work.
**c. **Reverse Charge Mechanism (RCM):**
- Job work is generally not subject to RCM. The principal is responsible for paying GST on the job work charges.
**d. **Return Filing:**
- **Principal’s Return:** The principal must report the details of the job work and the goods sent to the job worker in their **GSTR-1** return.
- **Job Worker’s Return:** The job worker must report the details of the job work performed and goods sent to the principal in their **GSTR-1** return if they are registered.
### **4. **Tax Treatment**
- **Job Work Charges:** GST is applicable on the job work charges. The principal should pay GST on these charges based on the applicable rate.
- **Inputs and Input Tax Credit (ITC):**
- **On Inputs:** The principal can claim ITC on the inputs sent to the job worker. The job worker can also claim ITC on any services or goods used for job work.
- **On Job Work Charges:** The principal can claim ITC on the job work charges paid to the job worker.
### **5. **Job Work Process Flow:**
1. **Goods Dispatch to Job Worker:**
- Principal issues Delivery Challan.
- Goods are sent to job worker’s premises.
2. **Job Work Process:**
- Job worker performs the job work as per the agreement.
3. **Goods Receipt from Job Worker:**
- Job worker issues Delivery Challan or Tax Invoice.
- Principal receives goods back at the factory.
4. **Compliance and Reporting:**
- Principal reports job work details in GSTR-1.
- Job worker reports job work details in GSTR-1.
### **6. **Record-Keeping:**
- Maintain detailed records of all challans, invoices, and correspondence related to job work. This helps in smooth GST compliance and future audits.
### **Additional Notes:**
- Ensure that all documents and processes comply with the GST Act and Rules to avoid penalties.
- For specific issues, consult with a GST consultant or tax advisor familiar with job work procedures.
By following these guidelines, you can efficiently manage the job work process under GST and ensure compliance with the regulatory requirements.
### **1. **Understanding Job Work under GST**
Under GST, job work refers to processing or working on goods owned by someone else, typically on a contract basis. The principal (the person sending the goods) and the job worker (the person performing the job) both have specific obligations under the GST law.
### **2. **Principal and Job Worker Registration**
- **Principal:** The principal must be registered under GST.
- **Job Worker:** The job worker should be registered if their aggregate turnover exceeds ₹20 lakhs (₹10 lakhs for special category states). If the turnover is below this threshold, registration is optional.
### **3. **Documents and Compliance for Job Work**
**a. **Sending Goods to Job Worker:**
- **Challan for Job Work:** When sending goods to a job worker, the principal needs to issue a **Delivery Challan**. This should be in the prescribed format and include details such as the GSTIN of the job worker, description of goods, quantity, and value.
- **Intimation:** The principal must also send an intimation to the GST department about the job work. This is done through the **GSTR-1** return.
**b. **Receiving Goods after Job Work:**
- **Goods Receipt:** Upon completion of job work, the job worker must issue a **Delivery Challan** or a **Tax Invoice** if they are registered. This should mention the principal's GSTIN and the details of the job work.
**c. **Reverse Charge Mechanism (RCM):**
- Job work is generally not subject to RCM. The principal is responsible for paying GST on the job work charges.
**d. **Return Filing:**
- **Principal’s Return:** The principal must report the details of the job work and the goods sent to the job worker in their **GSTR-1** return.
- **Job Worker’s Return:** The job worker must report the details of the job work performed and goods sent to the principal in their **GSTR-1** return if they are registered.
### **4. **Tax Treatment**
- **Job Work Charges:** GST is applicable on the job work charges. The principal should pay GST on these charges based on the applicable rate.
- **Inputs and Input Tax Credit (ITC):**
- **On Inputs:** The principal can claim ITC on the inputs sent to the job worker. The job worker can also claim ITC on any services or goods used for job work.
- **On Job Work Charges:** The principal can claim ITC on the job work charges paid to the job worker.
### **5. **Job Work Process Flow:**
1. **Goods Dispatch to Job Worker:**
- Principal issues Delivery Challan.
- Goods are sent to job worker’s premises.
2. **Job Work Process:**
- Job worker performs the job work as per the agreement.
3. **Goods Receipt from Job Worker:**
- Job worker issues Delivery Challan or Tax Invoice.
- Principal receives goods back at the factory.
4. **Compliance and Reporting:**
- Principal reports job work details in GSTR-1.
- Job worker reports job work details in GSTR-1.
### **6. **Record-Keeping:**
- Maintain detailed records of all challans, invoices, and correspondence related to job work. This helps in smooth GST compliance and future audits.
### **Additional Notes:**
- Ensure that all documents and processes comply with the GST Act and Rules to avoid penalties.
- For specific issues, consult with a GST consultant or tax advisor familiar with job work procedures.
By following these guidelines, you can efficiently manage the job work process under GST and ensure compliance with the regulatory requirements.
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