Job work

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Shaik Sharief (Querist)
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18 April 2018 when job worker is receiving goods from principal then there is no gst on it.. when job worker sending finished goods to the principal then there is also no gst on it.. provided ITC 04... My doubt is where shall the job worker set off his inputs he got on the goods used by him to make finshed goods.. ??

Guest

Guest (Expert)

18 April 2018 He can use his credit against his liability arising on account of providing Job work services.

Shaik Sharief

Shaik Sharief (Querist)
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19 April 2018 Thanks for the answer mam,

what if he doesnt hav any other domestic sales and he work only for the principal.

regards

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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02 August 2024 In the GST regime, the tax treatment of job work and the mechanism for setting off Input Tax Credit (ITC) can be intricate. Here's how it works:

### **1. **GST Treatment on Job Work Transactions**

**a. **Receiving Goods from Principal:**
- **No GST:** When a principal sends raw materials or semi-finished goods to a job worker, the job worker does not need to charge GST. This transaction is covered under the provisions for job work, which allows for the movement of goods without immediate GST impact.

**b. **Sending Finished Goods to Principal:**
- **No GST:** When the job worker sends finished goods back to the principal, GST is not charged on this transaction as well, provided the principal has availed the benefit of ITC under the job work provisions.

### **2. **ITC for Job Workers**

- **ITC on Inputs:** The job worker can claim Input Tax Credit (ITC) on the goods or services used in the course of providing job work services. This includes ITC on raw materials, consumables, and any other inputs used in the process.

**3. **Setting Off ITC:**

**a. **Utilizing ITC When No Domestic Sales:**
- **ITC Set-Off:** If the job worker has no other domestic sales and primarily works for the principal, they can still utilize the ITC on inputs used for job work services. The ITC claimed on inputs can be adjusted against any GST payable by the job worker on other taxable supplies, if applicable.
- **Refund Claim:** If the job worker has no output GST to set off the ITC against and no other taxable supplies, they can apply for a refund of the unutilized ITC. The refund process is governed by the GST laws, which allow job workers to claim a refund for unutilized ITC if they have no output liability.

**b. **Filing ITC-04:**
- **Compliance:** The job worker must file ITC-04, which is a form used to report the details of goods sent to and received from job workers. This is essential for maintaining compliance and ensuring that the principal can also claim ITC for the goods sent to job workers.

**c. **Refund Process:**
- **Application:** If the job worker applies for a refund of the unutilized ITC, they need to follow the GST refund process, which includes submitting the refund application and providing necessary documentation to support the claim.

### **4. **Additional Considerations:**

- **Record-Keeping:** Maintain accurate records of all job work transactions, including inputs, outputs, and ITC claims. Proper documentation is crucial for both compliance and for processing any ITC refunds.
- **Consultation:** Since GST regulations can be complex and subject to change, consulting with a GST professional or tax consultant can provide tailored guidance and ensure that all compliance requirements are met.

### **Summary:**

- **GST on Job Work:** No GST on goods sent to and received from job workers.
- **ITC for Job Workers:** Job workers can claim ITC on inputs used for job work services.
- **Utilization of ITC:** If the job worker has no other taxable supplies, ITC can be claimed as a refund.
- **Compliance:** File ITC-04 and apply for refunds as needed.

Ensure that all processes align with the latest GST rules and regulations, and consider professional advice for complex scenarios.