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Job work under GST

Meaning of Job Work

The term Job-work itself explains the meaning. It is the processing of goods supplied by the principal manufacturer to the job worker. The person who sent the goods for job work is called the principal and the one who does the said job is known as ‘job worker.

As per section 2(68) of the CGST Act 2017, "job work" means any treatment or process undertaken by a person on goods belonging to another registered person.

Accordingly, for treating anything as job work there must be: -

  • Two persons;
  • The goods should belong to another registered person;
  • Process to be undertaken on the said goods shall be by the job worker, whether registered or not.

Documents & forms involved in the job work process

Delivery Challan

  • All goods shall be sent to the job worker under the cover of a delivery challan issued by the principal.
  • Delivery challan is required even if such goods are sent directly to a job-worker.
  • Details of job work challans issued during a quarter must be furnished in FORM GST ITC-04 on or before the 25th day of the month succeeding the said quarter.
  • Details of job work challan generated by the principal are also required to furnish in Form GSTR-1.

Form GST ITC-04

The principal is required to file Form GST ITC-04 by the 25th day of the month succeeding the quarter. The said form will serve as intimation as envisaged under section 143 of the CGST Act, 2017. Details required to be furnished by Principal in Form GST ITC-04 in respect of the following-

i. Goods dispatched to a job worker or

ii. Goods received from a job worker or

iii. Goods sent from one job worker to another.

Accounts and records

The principal shall be responsible to keep proper accounts for the inputs or capital goods or waste/scrap lying with the job worker.

Input tax credit (ITC) provisions on goods sent to job worker

Section 19 of GST provides that the principal is entitled to take the credit of tax paid on inputs sent to the job- worker for the job work. Further, the principal is allowed to claim the credit even when the goods have been directly sent to the job worker from supplier's place.

E-way bill requirements for sending material for job work

E-way bill is generated online by the registered person or transporter which is required to be carried by the transporter if the value of goods exceeds Rs 50000. In case of goods are sent for job work,

  • Eway bill is required to be generated if goods are sent to a job worker in another state even the value of the consignment is less than Rs 50000.
  • Where goods are being transported on a delivery challan in lieu of invoice, the same shall be declared in e-way bill.
  • E-way bill can be generated either by the Principal or job worker
  • If the job worker is unregistered, an e-way bill should be generated by the Principal.

Waste and scrap arising during job work

As per section 143 (5) of the CGST Act, 2017, waste generated at the premises of the job worker may be supplied directly by the registered job worker from his place of business on payment of tax or s such waste may be cleared by the principal, in case the job workeris not registered.


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TaxGyata Team

TaxGyata Team