The Indian economy is dominated by the job work sector. This includes activities outsourced that could or might not lead to manufacturing. This is explained by the term Job-work. It refers to the processing of goods supplied directly by the principal. Central Excise already has the concept of job work. A principal manufacturer can send semi-finished goods or inputs to a job worker for further processing. Numerous procedural concessions and facilities have been made available to job workers, as well as to the principal supplier of goods. It is important that the principal supplier be responsible for ensuring compliance on behalf of job workers on goods they process. This is because job workers are often small people who are not able to follow the specific provisions of the law. GST Act has special provisions regarding the removal of goods for job-work, and the receipt of the goods from the worker after processing. These provisions will be of benefit to both the principal and job worker.

What is Job work?

Section 2(68), 2017 CGST Act defines job work as “any treatment or procedure that a person undertakes on goods belonging to a registered person”. A job worker is the one performing the job. The principal retains ownership of the goods. However, the rights to the goods do not pass to the job worker. The principal requires that the job worker performs the necessary work to obtain the goods.

Job work Procedural aspects:

Certain facilities with certain conditions are offered in relation to job work, some of which are as under:

a) A registered person (Principal) can send inputs/ capital goods under intimation and subject to certain conditions without payment of tax to a job worker and from there to another job worker and after completion of job work bring back such goods without payment of tax. The principal is not required to reverse the ITC availed on inputs or capital goods dispatched to job worker.

b) Principal can send inputs or capital goods directly to the job worker without bringing them to his premises, still the principal can avail the credit of tax paid on such inputs or capital goods.

c) However, inputs and/or capital goods sent to a job worker are required to be returned to the principal within 1 year and 3 years, respectively, from the date of sending such goods to the job worker.

d) After processing of goods, the job worker may clear the goods to-

(i) Another job worker for further processing;

(ii) Dispatch the goods to any of the place of business of the principal without payment of tax;

(iii) Remove the goods on payment of tax within India or without payment of tax for export outside India on fulfilment of conditions.

e) If the principal declares the premise of the worker as an additional business place in his registration, the principal may use the facility to supply goods directly by the principal to the third person. If the job worker is GST registered, it is not necessary to declare the premises of the worker as an additional place of business. The principal must inform the Jurisdictional officer before supplying goods to the job worker. This includes details about the inputs that the principal intends to send and the nature of the processing to be performed by the job worker. If possible, the information must also include details about another worker.

f) The principal must issue a challan to cover the inputs and capital goods that are sent to the job-seeker. Even for inputs or capital goods that are sent directly to the worker, the challan must be issued. The details of the Invoice Rules rule 10 shall be included in the challan.

g) Principal shall be responsible for maintaining proper accounting for inputs and capital goods.

Input Tax credit on goods supplied to job worker

Section 19 of 2017 CGST Act provides that the principal, a person who supplies taxable goods to a job worker, shall be entitled to claim the credit for input tax paid on the inputs sent by the worker to do the job. The proviso further states that the principal may claim credit even if the goods are directly delivered to the job- worker, without the goods being brought into the premises of the principal. The principal does not have to wait until the inputs arrive at his business.

Time Limits for return of processed goods

Section 19 of the CGST Act states that inputs and capital goods must be returned to the principal within one or three years of being sent. Further, the provision of return of goods is not applicable in case of moulds and dies, jigs and fixtures or tools supplied by the principal to job worker.

 E-Way Bill requirements

1. E-Way Bill must be generated prior to goods being moved by the Job Worker to the principal or registered Job Worker.

2. The consignment of goods used for job work is not limited in value. If the consignment is less than Rs.1000, an e-way bill will be generated.

GST Return for goods supplied for Job Work

1. Section 143 requires that the principal inform Job Workers about all supplies made to them, as well as any supply made by another Job Worker. The principal is responsible for maintaining proper accounting for inputs and capital goods sent to Job Worker, as well as the items returned from Job Worker or supplied from the job site.

2. This information is required to be provided on GST Return Form ITC-04.

3. The principal must include details of all challans that relate to goods sent to or received from a job worker, or to one or more other job workers.

4. Rule 45(3) of CGST Rules states that the principal must provide details of challans relating to goods sent to a worker, received from a worker, or sent from one worker to another during a quarter in FORM GST ITC-04 by 25th of the following month or such extended period as the Commissioner may extend. The principal must include details of all challans that relate to goods sent to or received from a job worker, or to one or more other job workers.

GST Rates on Job work

Sno. Job work on GST Rate
1. Agriculture, forestry, fishing, animal husbandry 0%
2. Intermediary services related to cultivation and animal rearing 0%
3. (a) Printing of newspapers

(b) Textile and textile products

(c) Jewellery

(d) Printing of books (including Braille books), journals and periodicals

(e) Processing of hides, skins and leather



1. Manufacturing Industrial gases – Activity of applicant of sending Regasified Liquefied Natural Gas (RLNG), De-Mineralized Water (DM Water), Hydrogen Rich off Gas and raw water free of cost to a company (job worker) for manufacture of Hydrogen, Nitrogen and steam out of it, amounts to ‘job work’ and cannot be treated as taxable supply – Bharat Petroleum Corpn. Ltd, In re [2018] 98 436/70 GST 802 (AAR – Kerala)

2. Where assessee/applicant was engaged in manufacture of industrial gases (Oxygen, Nitrogen and Argon) for Essar on job work basis and Essar provided necessary goods such as electricity, industrial quality water to applicant on a free-of-cost basis, activity of manufacturing industrial gases undertaken by assessee would amount to job work as defined under section 2(68) – Inox Air Products(P.) Ltd., In re [2018] 94 144/68 GST 464 (AAR – Gujarat)

FAQ on JOB WORK          

1. Whether the goods of principal directly supplied from the job worker’s premises will be included in the aggregate turnover of the job worker?

No. It will be included in the aggregate turnover of the principal. However, the value of goods or services used by the job worker for carrying out the job work will be included in the value of services supplied by the job worker.

2. What would be treatment of the waste and scrap generated during the job work?

The waste and scrap generated during the job work can be supplied by the job worker directly from his place of business, on payment of tax, if he is registered. If he is not registered, the same would be supplied by the principal on payment of tax.

3. Are the provisions of job work applicable to all categories of goods?

No. The provisions relating to job work are applicable only when registered taxable person intends to send taxable goods. In other words, these provisions are not applicable to exempted or non-taxable goods or when the sender is a person other than registered taxable person.

4. Is it compulsory that job work provisions should be followed by the principal?

No. The principal can send the inputs or capital goods after payment of GST without following the special procedure. In such a case, the job-worker would take the input tax credit and supply back the processed goods (after completion of job-work) on payment of GST.

5. Should job worker and principal be located in same State or Union territory?

No this is not necessary as provisions relating to job work have been adopted in the IGST Act as well as in UTGST Act and therefore job-worker and principal can be located either is same State or in same Union Territory or in different States or Union Territories.

Author Bio

Qualification: CA in Practice
Company: Sunil Arora & Co.
Location: kaman Bharatpur, Rajasthan, India
Member Since: 03 Aug 2021 | Total Posts: 1

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September 2021