Job Work Under GST

Job work means any treatment or process undertaken by a person on goods belonging to another registered person and the expression “job worker” shall be construed accordingly. A large number of industries depend upon outside support for completing manufacturing activity. Job work means undertaking any treatment or process by a person on goods belonging to another registered taxable person. The person who is treating or processing the goods belonging to other person is called 'job worker' and the person to whom the goods belongs is called 'principal'.

Job work under GST 

Under section 143(1) of CGST Act, 2017 a Principal under intimation and subject to such conditions as may be prescribed can send inputs or capital goods to a job worker without payment of tax for further processing or treatment and from there subsequently to another job worker(s) and shall either bring back such inputs/capital goods after completion of job work or otherwise within 1 year/3years of their being sent out or supply such inputs/capital goods after completion of job work or otherwise within 1 year / 3 years 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.

Capital Goods excludes moulds and dies, jigs and fixtures, or tools.

Under GST regime, when goods are sent from a taxable person to a Job worker, it shall be treated as supply and will be liable to GST if the goods so sent are not received back within 1 year or 3 years in case of inputs or capital goods, as the case may be.

Further, a principal can supply goods from the place of business of job worker if the principal declares the place of business of the job worker as his additional place of business, except in following two conditions:

  • where the job worker is registered under section 25; or
  • where the principal is engaged in the supply of such goods as may be notified by the Commissioner

Taking input tax credit in respect of inputs and capital goods sent for job work

As per section 19, “principal” (typically a person who is sending the goods for job-work) shall, be entitled to take credit of input tax on inputs sent to a job-worker for job-work if the said inputs.

In case they are not received back within one year days then deemed that such inputs had been supplied by the principal to the job-worker on the day when the said inputs were sent out. For capital goods (other than moulds and dies, jigs and fixtures, or tools) the time limit will be three years.

  • (1) The principal shall, subject to such conditions and restrictions as may be prescribed, be allowed input tax credit on inputs sent to a job-worker for job-work. (2) Notwithstanding anything contained in clause (b) of sub-section
  • (2) of section 16, the principal shall be entitled to take credit of input tax on inputs even if the inputs are 5 directly sent to a job worker for job-work without being first brought to his place of business.
  • (3) Where the inputs sent for job work are not received back by the principal after completion of job-work or otherwise or are not supplied from the place of business of the job worker in accordance with clause (a) or clause (b) of sub-section (1) of section 143 within one year of being sent out, it shall be deemed that such inputs had been supplied by the principal to the jobworker on the day when the said inputs were sent out: Provided that where 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. 
  • (4) The principal shall, subject to such conditions and restrictions as may be prescribed, be allowed input tax credit on capital goods sent to a job worker for job work.
  • (5) Notwithstanding anything contained in clause (b) of sub-section (2) of section 16, the principal shall be entitled to take credit of input tax on capital goods even if the capital goods are directly sent to a job worker for job-work without being first brought to his place of business.
  • (6) 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: Provided that where 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. 
  • (7) Nothing contained in sub-section (3) or sub-section (6) shall apply to moulds and dies, jigs and fixtures, or tools sent out to a job worker for job work.

Explanation – For the purpose of this section, “principal” means the person referred to in section 143.

Job work procedure

Section 55 prescribes the procedure for removal of goods to job worker through an approval from Commissioner. It is provided that the responsibility for accountability of the goods shall lie with the “principal”. The Inputs send for the Job work may bring back within 1 year and specified capital goods within 3 year without payment of the duty. 

GST rates on job work services is being rationalised as follows: –

Description of Service Rate
Job work services in relation to all products falling in Chapter 71 (including imitation jewellery) 5%
Job work services in relation to food and food products falling under Chapters 1 to 22 of the HS Code (except packing of processed milk into packets) 5%
Job work services in relation to products falling under Chapters 23 of the HS Code except dog and cat food put up for retail sale (CTH 23091000) 5%
Job work in relation to manufacture of umbrella 12%
Job work in relation to manufacture of clay bricks falling under CTH 69010010 5%
Services by way of printing on job work basis or on goods belonging to others in relation to printing of all goods falling under Chapter 48 or 49, which attract GST @ 5% or Nil [Heading 9988] 5%
Services by way of printing on job work basis or on goods belonging to others in relation to printing of all goods falling under Chapter 48 or 49, which attract GST @ 12% [Heading 9988] 12%
Services by way of printing on job work basis or on goods belonging to others in relation to printing of goods falling under Chapter 48 or 49, other than those covered by (6) and (7) above, [Heading 9988] 18%
Services by way of printing in relation to printing of all goods falling under Chapter 48 or 49, which attract GST @ 5% or Nil, where only content is supplied by the publisher and the physical inputs including paper used for printing belong to the printer [(Heading 9989)] 12%
Services by way of printing of all goods falling under Chapter 48 or 49 which attract GST @12%, where only content is supplied by the publisher and the physical inputs including paper used for printing belong to the printer 12%
Services by way of printing of all goods falling under Chapter 48 or 49 which attract GST @18% or above, where only content is supplied by the publisher and the physical inputs including paper used for printing belong to the printer 18%
To issue a clarification with regard to classification of printing products/services.