Rates of Tax on Job Work wef from 01st October, 2019

Difference between Entry 26(id) and 26(iv) of Notification No. 11/2017-CTR

On  30th September 2019, CBIC had issued a Notification No. 20/2019-Central Tax (Rate)  to give effect to Recommendations made by GST Council in its 37th Meeting held in Goa. By this Notification No. 20/2019-Central Tax (Rate), CBIC has amended Entry No. 26 and inserted few new entries in the Notification No. 11/2017-Dated 28th June 2017 (As amended from time to time). Because of this amended there has been lot of confusion about the scope of entry no. 26(id) and  26(iv) with respect to rate of GST.  The question arise is there any difference between entry No. 26(id) and 26(iv) ? How they need to be interpreted.

First we need to look the entries, which is reproduced here.

Entry No. 26 (id)

This entry has added through Notification No. 20/2019-Central Tax (Rate) dt 30.09.2019 in the Notification No. 11/2017-Dated 28th June 2017 (As amended from time to time).

Entry No. 26 (iv)

This is an old entry but modified through Notification No. 20/2019-Central Tax (Rate) dt. 30.09.2019 in the Notification No. 11/2017-Dated 28th June 2017 (As amended from time to time).

(id) Services by way of job work other than (i), (ia), (ib) and (ic) above; [(iv) Manufacturing services on physical inputs (goods) owned by others, other than (i), (ia), (ib), (ic), (id), (ii), (iia) and (iii) above.
Rate of GST-12% Rate of GST-18%

The question arises that when an Entry No. 26 (iv) has already been given in the notification, then why the Entry No. 26 (id) has been added again.

This may be interpreted as follows:-

Kindly note both entries (entry no. 26(id) and  26(iv)) look like the same, but there is a lot of difference between these two entries.

After the carful reading of both entries, it found that the term “JOB WORK”   is used for entry no. 26(id), whereas the term “ANY TREATMENT OR PROCESS ON THE GOODS RELATED TO ANOTHER PERSON” has been used for entry no. 26 (iv). We  need to understand the difference between these two.

The term job work has been defined U/s 2(68) of the CGST Act, 2017, “Job work means any treatment or process undertaken by a person on goods belonging to another registered person and the expression “job worker” shall be construed accordingly”

As per the above definition it can be concluded that if treatment or process undertaken by a person on goods belonging to another registered person then it shall come under definition job work but if treatment or process undertaken by a person on goods belonging to another unregistered person then it shall not come with the definition of  job work.

Therefore entry no 26 (id)  is restricted only in cases where in any treatment or process is undertaken by a person on goods belonging to another registered person and  entry no. 26 (iv) is restricted  to any treatment or process carried out on goods belonging to an unregistered person.

“Word manufacturing has nothing to do with rate of GST for job work under these two entries”

So, these two entries might seem a “Look a like” but there is a clear distinction between these two entries.

(Views are strictly personal)

Author Bio

More Under Goods and Services Tax

8 Comments

  1. sunil bhageria says:

    But in some other articles published in tax guru by other author the have mentioned that entry no. 26(id) is restricted to machine job work related to engineering industry though in notification such type of things i.e engineering job work is not mentioned but in GST council meeting recommendation engineering job work was used but no incorporated in notification 20/2019. So confusion is prevailing . Though you interpretation seems logical . If a person otherwise fall in 12 % category but for the sake of clarity still charging 18 % GST on job work charge of registered person will it be objectionable by deptt.PL clarify .

    1. Rajesh Kumar Khandelwal says:

      Thank you sir for your comment. I have explained it as per my understanding about notification. These are my personal views. Others views may different. All are welcome.
      You can charges 18 %.

  2. Vinod Daga says:

    Thanks for such deep analysis of new notification.
    can you clarify please the relevance of Manufacturing services written under Heading 988 (in Column 2 of Entry 26. Whether all services as mentioned in column 3 of Entry 26 is to be read by affixing Column 2 or it should be read independently.

  3. VENKATARAMA RAJU M says:

    We are getting job work for printing by procuring paper by our clients for which we are consuming inks and other minute raw materials, kindly clarify the GST Rate from 1-10-2019.

  4. ARVIND PATEL says:

    SIR, WE ARE WORKING LOAN LICENCE PHARMACEUTICALS (JOB works) PARTY’S SEND TO US ALL RM & PM MATERIALS AND WE ARE PROCESS FINISHED GOODS, WHAT WILL BE THE GST RATE ? 18% OR 12%

  5. Mrudul says:

    Sir, your article on job work was very good. One small dought relating to the same. In case of repair of moulds belonging to another registered person, what will be the GST Rate? 18% or 12%

Leave a Comment

Your email address will not be published. Required fields are marked *