The job work process under the Goods and Services Tax (GST) is still unfamiliar to many businesses. This article provides an overview of how job work functions under GST and the requirements for compliance. The GST ITC-04, one of the most significant compliance forms, is essential for tracking the flow of goods to and from job workers. Proper filing allows businesses to achieve supply chain transparency, reclaim Input Tax Credit (ITC) effortlessly, and avoid audit conflicts.
Job Work under GST
1. Definition
Job work refers to any process or treatment done by a person on goods owned by another registered person.
2. Main Features of Job Work
The goods may be inputs, semi-finished goods, or capital goods.
Job work is a supply of service under GST.
The principal can supply goods to the job worker without charging GST by delivering a delivery challan.
3. GST ITC-04 Form
Purpose: To provide details of goods sent to job workers and received back.
Tracks:
Raw materials/semi-finished goods sent for processing.
Goods received after processing.
Goods supplied from one job worker to another.
4. Who Needs to File ITC-04?
Mandatory for:
Manufacturers or principals making supplies for job workers.
Job workers making supplies for another job worker or returning to the principal.
Turnover-based filing frequency:
Annual Turnover Frequency Due Dates
- Above ₹5 crore- half-yearly (Apr–Sep, Oct–Mar) 25th Oct, 25th Apr
- Up to ₹5 crore annually, 25th Apr
5. Time Limits for Return of Goods
- Goods Type Time Limit If Not Returned
- Inputs 1 year Deemed supply → GST + interest payable
- Capital Goods 3 years Same as above
- Molds/Dies/Fixtures No time limit Not applicable
6. Benefits of Filing ITC-04
- Regulatory Compliance: Prevents penalties & notices.
- Smooth ITC Claim: Facilitates easy availability of credit.
- Supply Chain Efficiency: Monitors goods, minimizes loss & delays.
- Audit Preparedness: Clean record trail for tax authorities.
7. Exemptions from ITC-04
- Goods used in exempt or non-taxable supplies.
- Goods damaged or destroyed during job work.
- Goods not returned within the stipulated time (ITC reversal applicable).
8. GST Rates for Job Work Services
Type of Job Work\tGST Rate
- Textiles, garments, printing 5%
- Diamonds, jewelry 1.5%
- Food products 5%
- All other work of the job (engineering, fabrication, etc.) 18%
9. Penalties for Non-Compliance
- ITC-04 has no specific late fee, but under Section 125 of the CGST Act, there are penalties:
- Offense Penalty
- Non-filing/incorrect filing Up to ₹25,000
- E-way bill violation: ₹10,000 or the tax amount (whichever is higher)
- ITC wrongly availed 100% of tax + 18% interest.
- Not returning goods in time: GST + interest from date of sending
Additional Consequences:
Demand notices for recovery of tax.
Suspension of GST registration is possible.
10. Common Mistakes to Avoid
- Incorrect GSTIN of job worker.
- Missing dispatch/receipt dates.
- Quantity mismatch of goods sent & returned.
- Late filing after the due date.
- Not reconciling ITC-04 with delivery challans & stock register.
11. Practical Example
Scenario:
ABC Manufacturing dispatches 1,000 KGS Paper send for slitting to to XYZ Job Works.
XYZ returns 900 KGS paper after slitting; 100 units are scrapped.
Steps for ABC:
Register dispatch & return details.
File ITC-04 for 900 units returned.
Reverse ITC for 100 units scrapped in the next return.
12. Compliance Tips
- Keep a job work register for the movement of goods.
- Match challans of delivery with ITC-04 data.
- File within the due date to escape penalties.
- Utilize accounting software automation for reminders.
The GST ITC-04 form is an important compliance form for companies involved in job work. It facilitates transparent tracing of goods, seamless claims of ITC, and prevents tax litigation.
By filing on time, keeping proper records, and being aware of GST job work rules, MSMEs can not just remain compliant but also enhance operational efficiency.
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