Job Work is processing semi-finished or unfinished goods belonging to another registered person. It is not a new concept introduced by the GST Act, but is in existence much before its commencement. The Goods and Services Tax Act, 2017(GST Act) makes an attempt to makes special provisions with regard to removal of goods for job-work and receiving back the goods after processing from the job worker without payment of GST so as to make the benefits of these provisions available both to the principal and the job worker. The GST Act also tries to cast duty on the principal for compliances under the Act even on behalf of the job worker considering job-workers to be small firms or individuals who may not be able to comply with legal provisions.
Section 2(68) of the GST Act defines job work as any treatment or process undertaken by a person on goods belonging to another registered person. In short, when raw materials or semi -finished goods are sent to a person for further processing into finished products is called job work and the person who does such work is called job worker. Only a registered person can send goods for job work. The job worker is not required to obtain registration under GST except if his aggregate turnover limit exceeds the specified threshold limit for registration. Input goods or capital goods can be sent for job work process under intimation without payment of tax subject to the conditions that such goods are returned to the registered person within 1 year (input goods) or 3 years (capital goods). Input goods are goods used or intended to be used by a supplier in the course or furtherance of business and capital goods refer to those goods which are capitalized in the books of account of the person claiming the input tax credit and which are used or intended to be used in the course or furtherance of business. Goods have to be sent for job work under a challan issued by the registered person and all the requirements for issuing challan under GST Act have to be followed. Under Rule 45 of the CGST Rules, 2017, the inputs, semi- finished goods or capital goods shall be sent to the job worker under the cover of challan issued by the Principal, including where such goods are sent directly to a job worker and where the goods are sent from one job worker to another job worker, the challan may be issued either by the principal or the job worker sending the goods to another job worker.
The delivery challan shall be issued in triplicate and contain the following details:
The registered person is required under the law to maintain proper accounts for the inputs or capital goods sent or received under job work and an intimation is to be furnished in GST Return Form ITC-04 to the officer on quarterly basis by the 25th of the month succeeding the quarter providing details of challan(s) in respect of goods dispatched to a job worker or received from a job worker. Further, E-way bill has to be generated before movement of goods by the Principal to the job worker and the registered person is entitled to claim input tax credit on goods so dispatched.
Job work sector is an important part of the manufacturing industry and includes mostly small scale industries or start-ups and GST law has made provisions for job work to extend support to this industry. Outsourcing work not only reduces cost of the activity otherwise would have to be undertaken but also increases employment opportunities and with no difference made as far as benefits under GST are concerned on goods sent for job work, registered persons would not hesitate to outsource work to smaller units.