Form GST ITC-04 – Job work under GST

Hello, in this post we will discuss on Form GST ITC-04  i.e., Job work under GST.

We will cover the following topics:

• What is GST ITC-04?
• ITC on job work
• Time limit for receiving back goods
• Direct selling of goods from the job worker’s place
• Time limit applicability 
• Documents to accompany
• GST rates on job work
• Form ITC-04
• GST ITC-04 Due date
• Details to furnish in ITC-04

What is GST ITC-04?

Job work means the processing of 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.

According to the GST Act, job work under GST means any treatment/process undertaken by a person on goods which belongs to another registered person. The person doing the job work is called the Job Worker.

For example, big shoe manufacturers (principal) send out the half-made shoes (upper part) to smaller manufacturers (job worker) to fit in the soles of the shoes. The job workers send back the shoes to the principal manufacturer.

The goods sent for job work can be raw material, parts or semi-finished goods. The finished goods can be a variation of the same or a complete product.

Note: Value of goods sent by the principal does not include in the aggregate turnover of the registered job worker.

ITC on job work

The principal manufacturer is allowed to take credit of the tax paid on the purchase of goods sent to the job worker. However, there are certain conditions to be met for such credit.

Place of business

ITC is allowed when:

• The goods are sent from the principal manufacturer to the job work.
• Goods are directly sent by the seller of the goods to the job worker without going to the principal manufacturer’s place.

Effective date

The effective date for the claim of ITC is based on the below conditions:

• If the goods are being sent from the principal manufacturer then the date of goods sent out will be the effective date.
• If the goods are being sent directly from the seller then the date of receipt of goods by the job worker will be the effective date.

Time limit for receiving back goods

The principal manufacturer must receive the goods back within the following period:

1. Capital Goods – 3 years from the effective date.
2. Input Goods – 1 year from the effective date.

So, in case the goods are not received within a specified time, those goods will be deemed as supply from the effective date. Then, later 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.

Direct selling of goods from the job worker’s place

The principal manufacturer can supply the goods from the place of business of a job worker only if the manufacturer declares such place of business as the additional place of business.

It is not applicable in the following conditions:

• If the job worker is registered.
• The principal manufacturer supplies goods which are notified by the Commissioner to be allowed to sell directly from the job worker’s place.

Time limit applicability

The time limit is not applicable when certain machinery/items are sent to the job worker to carry out the job work. These items can also include moulds and dies, jigs and fixtures, or tools sent out to a job worker for carrying out the job work.

Documents to accompany

Accounts & records of goods

The principal manufacturer has the responsibility for keeping proper accounts and records for the inputs or capital goods.

Challan

• All goods sent for job work must be accompanied by a challan.
• The principal manufacturer will issue this challan.
• You can directly send the challan for the inputs or capital goods to the job-worker.
• In Form GSTR-1 you must show the details of the challan.
• Through Form GST ITC-04 you can file the details of the challan.

The challan must include the following details:

1. Date and number of delivery challan.
2. Name, address, and GSTIN of the consigner and consignee.
3. HSN code, description, and quantity of goods.
4. Taxable value, tax rate, tax amount – CGST, SGST, IGST, UTGST separately.
5. The place of supply and signature.

GST Rates on Job work

Form ITC-04

The principal manufacturer must submit Form GST ITC-04 for every quarter. It should include the details of challans in respect of the following:

• Goods dispatched to a job worker.
• Goods which are received from a job worker.
• Sent from one job worker to another.

GST ITC-04 Due date

You must quarterly file GST ITC-04 on or before 25^th of the month succeeding the quarter. For example, for the quarter Oct-Dec, the due date is 25^th Jan.

Details to furnish in Form ITC-04

There are 2 parts in Form GST ITC-04:

• Goods sent to the job worker
• Goods received from the job worker

Details of inputs/capital goods sent for job-work

You can find details like GSTIN, challan number, tax amount, etc in this part of ITC-04.

Goods received back from a job worker or sent out from the business place of job-work

The details of goods received back from the job work are provided in this part. The principal can receive the goods or send them to another job worker directly from the first job worker’s place of business.

You can also see all details regarding original challans and new challans here.

With that, we come to an end of this post on GST ITC-04. Let us know your opinions by commenting below.

Refer to our blogs:

• Tax invoice
• GST E-way bill format
• E-way bill generation