Taxation of Job Work in GST Law: The term “Job Work” is defined in section 2(68) of CGST Act, 2017 as any treatment or process undertaken by a person on goods belonging to another registered person and the expression “job worker” shall be construed accordingly;.

The above definition has been enhanced which includes any treatment or process which will also cover repairs, calibration, testing etc. etc. At present scenario the Job Work has been defined in Central Excise Law as “Job Work” means processing or working upon of raw material or semi-finished goods supplied to the job worker, so as to complete a part or whole of the process resulting in the manufacture or finishing of an article or any operation which is essential for aforesaid process.

Input Tax Credit in respect of Inputs and Capital Goods sent for Job Work

The principal is eligible to take input tax credit on inputs or capital goods sent to a job worker for job work. The principal shall be entitled to take credit of input tax on inputs even if the inputs or capital goods are directly sent to a job worker for job work without being first brought to his place of business.

Where the inputs sent for job work are NOT received back by the principal after completion of job work within ONE YEAR of being sent out, it shall be deemed that such inputs had been supplied by the principal to the job worker on the day when the said inputs were sent out. However in case the inputs are sent directly to a job worker, the period of one year shall be counted from the date of receipt of inputs by the job worker.

Where the capital goods sent for job work are not received back by the principal within a period of THREE YEARS of being sent out, it shall be deemed that such capital goods had been supplied by the principal to the job worker on the day when the said capital goods were sent out. However in case the capital goods are sent directly to a job worker, the period of THREE YEARS shall be counted from the date of receipt of capital goods by the job worker.

It may be noted that time limit of 1 year or 3 year in case of inputs or capital goods respectively shall apply to moulds and dies, jigs and fixtures, or tools sent out to a job worker for job work.

Supply/Turnover of Job Worker for Threshold Exemption

The supply of goods, after completion of job work, by a registered job worker shall be treated as the supply of goods by the principal and the value of such goods shall not be included in the aggregate turnover of the registered job worker. The responsibility for keeping proper accounts for the inputs or capital goods shall lie with the Principal.

Any waste and scrap generated during the job work may be supplied by the job worker directly from his place of business on payment of tax, if such job worker is registered, or by the principal, if the job worker is not registered.

Explanation.––For the purposes of job work, input includes intermediate goods arising from any treatment or process carried out on the inputs by the principal or the job worker.

Transitional Provisions Relating to Job Work

Where any inputs received at a place of business had been removed as such or removed after being partially processed to a job worker for further processing, testing, repair, reconditioning or any other purpose in accordance with the provisions of existing law prior to 01-07-2017 and such inputs are returned to the said place on or after 01-07-2017, NO TAX shall be payable if such inputs, after completion of the job work or otherwise, are returned to the said place within 6 Months from 01-07-2017.

The period of 6 Months may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding 2 months. If these inputs are not returned within the said period the input tax credit shall be liable to be recovered.

Procedure of Job Work under GST

(1) The Principal may send any Inputs or Capital Goods, without payment of tax, to a job worker for job work and from there subsequently send to another job worker and likewise, and shall,––

(a)  bring back inputs, after completion of job work or otherwise, or capital goods, other than moulds and dies, jigs and fixtures, or tools, within one year and three years, respectively, of their being sent out, to any of his place of business, without payment of tax;

(b) supply such inputs, after completion of job work or otherwise, or capital goods, other than moulds and dies, jigs and fixtures, or tools, within one year and three years, respectively, of their being sent out from the place of business of a job worker on payment of tax within India, or with or without payment of tax for export, as the case may be:

The principal shall not supply the goods from the place of business of a job worker in accordance with the provisions of this clause unless the said principal declares the place of business of the job worker as his additional place of business except in a case—

(i)   where the job worker is registered under section 25; or

(ii)   where the principal is engaged in the supply of such goods as may be notified by the Commissioner.

 

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