In this article, we are going to discuss the input credit implications for goods sent for job work
Update as on 27th June 2020
CBIC has notified that the due dates to furnish ITC-04 for the January-March 2020 and April-June 2020 quarters (falling due between 20th March 2020 to 30th August 2020) stands extended till 31st August 2020.
Update as on 3rd April 2020
CBIC has notified that the due date to furnish ITC-04 for the January-March 2020 quarter (falling due between 20th March 2020 to 29th June 2020) stands extended till 30th June 2020.
Notification for Waiving ITC-04 dated 31st Aug 2019
Filing of the form ITC-04 for the quarters between July 2017 to March 2019 has been waived off. However, those challans goods dispatched to a job worker in the period July 2017 to March 2019 but not received from a job worker or not supplied from the place of business of the job worker as on the 31st March 2019 would have already been part of serial number 4 of ITC-04 for the quarter April-June 2019.
Notification for Extension on 28th Jun 2019
FORM GST ITC-04 for the period from July 2017 to June, 2019 extended till 31 st day of August 2019.
Notification for Extension on 28th Mar 2019
The due date for ITC-04 of July 2017-March 2019 is now 30th June 2019.
Earlier Notification on 31st Dec 2018
The due date for ITC-04 of July 2017-December 2018 has been extended to 31st March 2019.
What is job work?
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 worker) 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 job worker .
Please also refer our article on Impact of GST on job work
Input Tax Credit on job work
The principal manufacturer will be allowed to take credit of tax paid on purchase of goods send on job work.
However, there are certain conditions. Let us go through them in detail.
Place of business
ITC will be allowed in both the cases
Is there a time limit for the principal manufacturer to receive back the goods?
Yes. The principal manufacturer must receive the goods back within the following period:
- Capital Goods- 3 years from effective date
- Input Goods- 1 year from effective date
Please refer our article on impact of GST on job work
for more details.
What happens if the goods are not received within the specified time?
In case goods are not received within the period as mentioned above, such goods will be deemed as supply from effective date. The principal manufacturer will have to pay tax will on such deemed supply.
The challan issued will be treated as an invoice for such supply.
Can the principal directly sell from the job worker’s place?
The principal manufacturer can supply the goods from the place of business of a job worker only if
he (the principal) declares such place of business as his additional place of business.
This rule does not apply for the following-
) The job worker is registered
) The principal supplies goods which are specifically notified by the Commissioner to be allowed to sell directly from job worker’s place.
Various machinery sent to the job worker to carry out the job work
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.
Summary of conditions for claiming ITC on goods sent for job work
A.Goods can be sent to job worker:
- From principal’s place of business
- Directly from the place of supply of the supplier of such goods
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:
- Sent from principal’s place of business- Date of goods sent out
- Send directly from the place of supply of the supplier of such goods- Date of receipt by job worker
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.
- Capital Goods- 3 years
- Input Goods- 1 year
For transitional provisions, please refer our article on Impact of GST on job work
FORM GST ITC-04 must be submitted by the principal every quarter. He must include the details of challans in respect of the following-
- Goods dispatched to a job worker or
- Received from a job worker or
- Sent from one job worker to another
Due date of FORM GST ITC-04
ITC-04 is a quarterly form. It must be furnished on or before 25th
day of the month succeeding the quarter.
For example, for Oct-Dec quarter, the due date is 25th
Details to be furnished in ITC-04
There are 2 parts-
Details of inputs/capital goods sent for job-work
- Goods sent to job worker
- Goods received back from the job worker
Various details must be mentioned such as GSTIN, challan number, tax amount etc. All details will be available from the challans.
Goods received back from job worker or sent out from business place of job-work
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.
Guide to GST Portal for filing ITC-04
Here’s a step-by-step guide on filing on the GST portal
Login to the GST Portal
Go the Services>>Returns>>ITC Forms
Go to “Prepare Offline”
Once invoices are uploaded then click ‘Initiate Filing’.
Select tax period.
Check taxable amount and other details.
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.
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