Hello, in this post we will discuss Form GST ITC-04 i.e., Job work under GST. We will cover the following:
- What is ITC-04?
- ITC on job work
- Time limit for receiving back goods
- Direct selling of goods from the manufacturer’s place
- Time limit not applicable for the items
- Accompanying documents
- GST rates on job work
- Form ITC-04
- Due date
- Details to furnish in ITC-04
What is GST ITC-04 – job work under GST?
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 or 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, component 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.
Input Tax Credit 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
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 the goods
The principal manufacturer must receive the goods back within the following time period:
- Capital Goods – 3 years from the effective date
- Input Goods – 1 year from the effective date
In case the goods are not received within the specified period of time as mentioned above, such 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.
Can the principal manufacturer 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 the principal declares such place of business as the additional place of business.
This rule does not apply for the following conditions;
- If the job worker is registered.
- The principal manufacturer supplies goods which are specifically notified by the Commissioner to be allowed to sell directly from the job worker’s place.
Items on which time limit are not applicable
The time limit will not apply to certain machinery sent to the job worker to carry out the job work. The items include molds and dies, jigs and fixtures, or tools sent out to a job worker for carrying out the job work.
Accompanying documents for goods being sent
Accounts & records of goods
The responsibility for keeping proper accounts and records for the inputs or capital goods shall be that of the principal manufacturer.
- All goods sent for job work must be accompanied by a challan.
- The challan will be issued by the principal manufacturer.
- It will be issued for the inputs or capital goods sent directly to the job-worker.
- The details of challans must be shown in FORM GSTR-1.
- Details of challans must be filed through Form GST ITC-04.
The challan issued must include the below particulars:
- Date and number of the delivery challan
- Name, address, and GSTIN of the consigner and consignee
- HSN code, description, and quantity of goods
- Taxable value, tax rate, tax amount – CGST, SGST, IGST, UTGST separately
- The place of supply and signature
GST Rates on Job work
|JOB WORK ON||GST RATE|
|Agriculture, forestry, fishing, animal husbandry||0%|
|Intermediary services related to cultivation and animal rearing||0%|
|a) Printing of newspapers||5%|
|b) Textile and textile products|
|d) Printing of books (including Braille books), journals and periodicals|
|e) Processing of hides, skins, and leather|
FORM GST ITC-04 must be submitted by the principal manufacturer for every quarter. This 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
GST ITC-04 is filed quarterly. It must be furnished on or before 25th of the month succeeding the quarter.
For example, for the quarter Oct-Dec, the due date is 25th Jan.
Details to be furnished 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
Details such as GSTIN, challan number, tax amount, etc are to be mentioned.
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 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 in this part.
This ends the post on GST ITC-04. Let us know your opinion by commenting below.