Job work sector constitutes a significant industry in Indian economy. It includes outsourced activities that may or may not culminate into manufacture. The term job work means processing of goods supplied by the principal. The whole idea is to make principal responsible for meeting compliances on behalf of the job worker on the goods processed by him, considering the fact that typically the job- workers are small persons who are unable to comply with the discrete provisions of the law.

The GST Act 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. The benefit of these provisions shall be available both to the principal and the job worker.

Job Work

This article is intended to clarify the various aspects related to the various aspects of Job Work under GST Act:

What is Job Work

Job work means any treatment or process undertaken by a person on goods belonging to another registered person (principal). The person doing the job work is called job worker. The ownership of the goods does not transfer to the job worker but it rests with the principal. The job worker is required to carry out the process specified by the principal, on the goods.

Note: Value of goods sent by the principal will not be included in the aggregate turnover of the registered job worker.

Torn brown rough textured paper with GST Goods and Services Tax word at background surface.

Procedural Aspects

A registered person (Principal) under intimation to the department through Form ITC-04 can send inputs or capital goods and subject to certain conditions without payment of tax to a job worker for job work.

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

  • Bring back such goods without payment of tax, or
  • Another job worker for further processing, or
  • Dispatch the goods to any of the place of business of the principal without payment of tax, or
  • Remove the goods on payment of tax within India or without payment of tax for export outside India on fulfilment of conditions.

Documentation and Returns under GST

The responsibility for keeping proper accounts for the inputs or capital goods shall lie with the principal.

The inputs, semi-finished goods or capital goods which are required to be sent to job worker for job work shall be send under the cover of a Delivery Challan which is issued by the principal. Such delivery challan is required even in case where such goods are sent directly to a job worker.

Contents of Delivery Challan:

  • Date and Number of the Delivery Challan
  • Name, Address, and GSTIN of the consigner and consignee, if registered
  • HSN/SAC, description and quantity of goods
  • Taxable value, Tax rate and Tax amount –CGST, SGST/UTGST, IGST or cess separately
  • Place of Supply, in case of inter-State movement; and signature

Details of the challans must be reflected in Form GSTR-1. Finally, details of challans must also be filed through Form GST ITC – 04.

Form GST ITC – 04 must be submitted on quarterly basis by 25th day of the month succeeding the quarter. Under form GST ITC – 04, following details are to be provide:

  • Goods dispatched to job-worker;
  • Goods received from job-worker;
  • Goods send from one job-worker to another job-worker.

Availment of ITC on goods sent for job work

  • The principal can avail the ITC on inputs or capital goods dispatched to job worker.
  • Further, the proviso also provides that the principal can take the credit even when the goods have been directly supplied to the job worker without bringing into the premise of the principal.
  • The principal need not wait till the inputs are first brought to his place of business.

Time Limit for Return of Processed Goods

The inputs and/or capital goods after processing 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.

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.

W.e.f 1st February 2019, the commissioner has been empowered to extend the time limit for return of goods sent on job work for a further period as given below:

  • Inputs – additional period of 1 year (totally 2 years)
  • Capital goods – additional period of 2 years (totally 5 years)

Provided where inputs/capital goods sent directly to job worker, the period will be counted from date of receipt of inputs/capital goods by the job worker.

Consequence when goods are not returned within time

If the inputs or capital goods are not returned within time limit specified, the principal is liable to pay tax along with interest @18% from the day goods sent out by deeming the activity as an outward supply and disclosed the same in GSTR-1 & GSTR-3B.

Waste Generated by the Job worker: 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, in such case GST is payable by job-worker.

However, if job-worker is not registered then such waste may be cleared by the principal manufacturer and GST would be payable by the principal manufacturer. (Note: Such premises to be an additional place of business of principal)

Registration under GST

W.e.f 1st February, 2019, a Job worker is required to obtain GST registration only in case his aggregate turnover in a particular financial year is beyond the threshold limit of Rs. 20 Lakhs. This is irrespective of whether the principal and the job worker are situated in the same State or in different States and supply is of goods or services. The job worker can also registered himself voluntarily.

E-way Bill Generation under GST

As per provisions on e-way bill, every registered person who causes movement of goods of consignment value exceeding Rs. 50,000/- or the limit applicable to that particular state as the case may be, needs to furnish information relating to the movement of goods in e-way bill even in cases where such movement is for reasons other than supply.

If goods are sent by a principal to a job worker, e-way bill shall be generated in the following scenario:

Particulars E-Way Bill Generation
Within State Only if the consignment value exceeds Rs. 50,000
Outside State Irrespective of the value of consignment, E-way bill is to be generated


In the present world, it is important to the assessee to be aware of the legal implications under GST in order to avoid extra costs.

The main purpose of job work is to avoid the unnecessary GST cost when goods are sent for further processing. However, the principal has to ensure the proper records of documents, generation of the e way bill by principal or job worker are complied with.

In case of any queries, suggestions; the author can be reached at [email protected]

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June 2021