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Implications of GST and the input tax credit on goods sent for job work is explored in the article.
24th Sept 2021
With effect from 1st October 2021, the frequency of filing the ITC-04 form has been revised through the Central Tax notification number 35/2021 dated 24th September 2021, as follows-
(1) Those with AATO more than Rs.5 crore – Half-yearly from April-September- due on 25th October and October-March due on 25th April.
(2) Those with AATO up to Rs.5 crore – Yearly from FY 2021-22 due on 25th April.
28th May 2021
The due date to file ITC-04 for Jan-Mar 2021 is extended up to 30th June 2021.
1st May 2021
ITC-04 for the quarter January-March 2021 is extended from 25th April 2021 up to 31st May 2021.
Job work means processing or working 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. For example, big shoe manufacturers (principal) send out the half-made shoes (upper part) to smaller manufacturers (job workers) to fit in the soles.
The job workers send back the shoes to the principal manufacturer. As per GST Act, job work means any treatment or process undertaken by a person on goods belonging to another registered person. The person doing the job work is called a job worker. Please also refer to our article on Impact of GST on job work.
The principal manufacturer will be allowed to take credit for tax paid on purchase of goods sent on job work. However, there are certain conditions. Let us go through them in detail.
Yes. The principal manufacturer must receive the goods back within the following period:
Please refer to our article on impact of GST on job work for more details.
In case goods are not received within the period as mentioned above, such goods will be deemed as supply from the effective date. The principal manufacturer will have to pay tax on such deemed supply. The challan issued will be treated as an invoice for such supply.
The principal manufacturer can supply the goods from the place of business of a job worker only if he (the principal) declares such a place of business as his additional place of business. This rule does not apply for the following-
The time limits will not apply to items like moulds and dies, jigs and fixtures, or tools sent out to a job worker for carrying out the job work.
A. Goods can be sent to job worker:
ITC will be allowed in both the cases.
B. Effective date for goods send depends on place of business:
C. The goods send must be received back by the principal manufacture within the following period:
D. In case goods are not received within the period mentioned above, such goods will be treated as supply from the effective date and tax will be payable.
For transitional provisions, please refer to our article on Impact of GST on job work.
Where the job worker sends goods from to another job worker, the same conditions shall apply as the principal manufacturer. Accordingly, the job worker can endorse the challan issued by the principal to indicate the quantity and description of goods when he sends goods to another job worker. The job worker must file GSTR-1 and GSTR-3B like any other taxpayer.
Form GST ITC-04 must be submitted by the principal every quarter. He must include the details of challans in respect of the following-
ITC-04 was a quarterly form until September 2021. It had to be furnished on or before the 25th day of the month succeeding the quarter. For example, for the Jul-Sept quarter, the due date is 25th October 2021.
However, with effect from 1st October 2021, it is a half-yearly and yearly form as follows:
(1) Those with an annual aggregate turnover of more than Rs.5 crore – Half-yearly from April-September- due on 25th October and October-March due on 25th April.
(2) Those with an annual aggregate turnover of up to Rs.5 crore – Yearly from FY 2021-22 due on 25th April.
There are 2 parts-
Various details must be mentioned such as GSTIN, challan number, tax amount etc. All details will be available from the challans.
The details of goods received back 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’s a step-by-step guide on filing on the GST portal.
Step 1: Login to the GST Portal
Step 2: Go the Services>>Returns>>ITC Forms
Step 3: Go to “Prepare Offline” Upload invoices
Step 4: Once invoices are uploaded then click ‘Initiate Filing’.
Step 5: Select tax period.
Step 6: Check taxable amount and other details.
Step 7: Finally, file the return with DSC or EVC as applicable.
A considerable amount of time has been provided by the government to the job workers for returning goods to the principal holder. GST will help in maintaining transparency in the details of input credit on goods sent for job work.
For more information on GST impact on job work and other input tax credit provisions please visit our blog. Be GST ready through ClearTax GST Software, an easy user-friendly versatile software which will help you to be GST compliant.