Procedure of Job Work Under GST Regime: A Comprehensive Guide

The Goods and Services Tax (GST) regime, introduced in India, has revolutionized the indirect tax system. Under GST, the concept of job work has gained prominence, where a registered person can send raw materials or semi-finished goods to another person (job worker) for processing, finishing, or any other specific task. In this comprehensive guide, we will unravel the procedure of job work under the GST regime, providing valuable information and step-by-step instructions.

Understanding Job Work under GST

Job work refers to any treatment or process performed on raw materials or semi-finished goods by a job worker on behalf of a registered principal. The principal retains ownership of the goods throughout the job work process, and upon completion, the processed goods are returned to the principal.

The job work provisions under GST aim to simplify and streamline the manufacturing process, allowing businesses to outsource certain tasks to specialized job workers while ensuring compliance with tax regulations.

GST Registration for Job Workers

Job Worker: A person undertaking job work must be registered under GST if their aggregate turnover exceeds the threshold limit of Rs. 20 lakhs (Rs. 10 lakhs for special category states) in a financial year. If the job worker is not registered, the principal can use the Goods Movement Form (GST FORM ITC-04) to report the details of goods sent for job work and received back.

Principal: The principal, who sends goods for job work, must be registered under GST, regardless of their turnover. Proper documentation and compliance are essential for seamless job work operations.

Steps Involved in Job Work Procedure

Step 1: Sending Goods for Job Work

The principal shall prepare a delivery challan in triplicate containing details of the goods sent for job work. The delivery challan should include the following information:

1. Name, address, and GSTIN of the principal.

2. Name, address, and GSTIN of the job worker.

3. Description, quantity, and value of the goods being sent for job work.

4. The nature of processing to be carried out by the job worker.

5. HSN code of the goods.

The principal must ensure that the goods are transported to the job worker's place of business using the delivery challan.

Step 2: Job Work Process

Upon receiving the goods, the job worker shall acknowledge the receipt of goods in the original copy of the delivery challan.

The job worker will perform the specified job work process on the goods as per the instructions of the principal.

If any waste or by-products are generated during the job work process, the job worker can either:

1. Return the waste/by-products to the principal.

2. Dispose of the waste/by-products on their own after paying the applicable GST, if any.

Step 3: Return of Processed Goods

Once the job work is completed, the job worker shall prepare a challan in triplicate, containing the details of the goods being returned to the principal. The challan should include:

1. Name, address, and GSTIN of the job worker.

2. Name, address, and GSTIN of the principal.

3. Description, quantity, and value of the processed goods being returned.

4. HSN code of the goods.

The job worker shall return the processed goods along with the challan to the principal's place of business.

Step 4: Receipt of Processed Goods by the Principal

Upon receiving the processed goods, the principal shall acknowledge the receipt of goods in the original copy of the challan.

The principal must account for the processed goods in their books of accounts and comply with GST return filing, if applicable.

Important Points to Note

The principal can send goods directly from the place of business of the supplier of raw materials to the place of the job worker without bringing them to their premises.

The job worker is not required to register separately for the goods received for job work.

The principal can take input tax credit on the goods sent for job work if they are received back within one year (extendable by the Commissioner) from the date of dispatch.

If the processed goods are not received back within the stipulated time, the input tax credit availed will be reversed.

Conclusion

The procedure of job work under the GST regime plays a significant role in streamlining the manufacturing process and promoting specialization. By understanding the step-by-step process, both principals and job workers can ensure compliance with GST regulations and facilitate seamless job work operations.

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