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Job Work Under GST GOODS SERVICE TAX

Job Work Under GST GOODS SERVICE TAX

Job Work Under GST  

Job Work Under GST : Job work means undertaking any treatment or process by a person on goods belonging to another registered taxable person. The person who is treating or processing the goods belonging to other person is called ‘job worker’ and the person to whom the goods belongs is called ‘principal’. This definition is much wider than the one given in Notification No. 214/86 – CE dated 23rd March, 1986.

In the said notification, job work has been defined in such a manner so as to ensure that the activity of job work must amount to manufacture. Thus the definition of job work itself reflects the change in basic scheme of taxation relating to job work in the proposed GST regime.

Job Work Under GST  

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 itself explains the meaning. It is processing of goods supplied by the principal. The concept of job-work already exists in Central Excise, wherein a principal manufacturer can send inputs or semifinished goods to a job worker for further processing.

Many facilities, procedural concessions have been given to the job workers as well as the principal supplier who sends goods for job-work. The whole idea is to make the principal responsible for meeting compliances on behalf of the job-worker on the goods processed by him (job-worker), considering the fact that typically the job-workers are small persons who are unable to comply with the discrete provisions of the law.

Job Work Under GST  

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 the payment of GST. The benefit of these provisions shall be available both to the principal and the jobworker.

Section 2(68) of the CGST Act, 2017 defines job-work as ‘any treatment or process undertaken by a person on goods belonging to another registered person’. The one who does the said job would be termed as ‘jobworker’. The ownership of the goods does not transfer to the job-worker but it rests with the principal. The jobworker is required to carry out the process specified by the principal on the goods.

Job Work Under GST  

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 and can still avail the credit of tax paid on such inputs or capital goods.

c) However, inputs and/or capital goods sent to a jobworker 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.

Job Work Under GST  

The facility of supply of goods by the principal to the third party directly from the premises of the jobworker on payment of tax in India and likewise with or without payment of tax for export may be availed by the principal on declaring premise of the job-worker as his additional place of business in registration.

In case the job-worker is a registered person under GST, even declaring the premises of the job-worker as additional place of business is not required. Before supply of goods to the job-worker, the principal would be required to intimate the Jurisdictional Officer containing the details of the description of inputs intended to be sent by the principal and the nature of processing to be carried out by the job-worker. The said intimation shall also contain the details of the other job-workers, if any.

The inputs or capital goods shall be sent to the jobworker under the cover of a challan issued by the principal. The challan shall be issued even for the inputs or capital goods sent directly to the job-worker. The challan shall contain the details specified in Rule 10 of the Invoice Rules.

The responsibility for keeping proper accounts for the inputs or capital goods shall lie with the principal. Input Tax credit on goods supplied to job worker Section 19 of the CGST Act, 2017 provides that the principal (a person supplying taxable goods to the jobworker) shall be entitled to take the credit of input tax paid on inputs sent to the job-worker for the job-work.

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 being brought into the premise of the principal. The principal need not wait till the inputs are first brought to his place of business.

Job Work Under GST  

Time Limits for the return of processed goods As per section 19 of the CGST Act, 2017, inputs and capital goods after processing shall be returned back to principal within one year or three years respectively of their being sent out. 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.

Extended meaning of input As per the explanation provided in Section 143 of the CGST Act, 2017, where certain process is carried out on the input before removal of the same to the jobworker, such product after carrying out the process is to be referred as the intermediate product. Such intermediate product can also be removed without the payment of tax.

Therefore, both input and intermediate product can be cleared without payment of duty to job-worker. Waste clearing provisions Pursuant to Section 143 (5) of the CGST Act, 2017, 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 or such waste may be cleared by the principal, in case the job-worker is not registered.

Transitional provisions Inputs, as such, or partially processed inputs which are sent to a job-worker prior to introduction of GST under the provisions of existing law [Central Excise] and if such goods are returned within 6 months from the appointed day [i.e. the day on which GST will be implemented] no tax would be payable.

If such goods are not returned within prescribed time, the input tax credit availed on such goods will be liable to be recovered. If the manufactured goods are removed, prior to the appointed day, without payment of duty for testing or any other process which does not amount to manufacture, and such goods are returned within 6 months from the appointed day, then no tax will be payable.

For the purpose of these provisions during the transitional period, the manufacturer and the job-worker are required to declare the details of such goods sent/received for job-work in prescribed format GST TRAN-1, within 90 days of the introduction of GST.

Job Work Under GST  

From a GST compliance perspective, the following key activities and processes would need to be changed to be GST compliant:

a. Migration of existing indirect tax registrations to GST

b. Invoice formats to be aligned with the GST law requirements

c. Sales and purchase register formats in the systems to capture the mandatory fields in order to follow the GST monthly compliances of uploading the sales register/ details of outward supplies and details of inward supplies, payment of GST, filing of GST returns, etc.

d. Matching the input tax credit computed by the GSTN (based on outward supply register uploaded by vendors) with the input tax credit as per the books

e. Computation of GST liability on a monthly basis and payment of GST

f. Timely payment of CGST, SGST and IGST to the respective Central/State Governments

g. Filing of monthly GST returns

The above stated compliances are broad level. There could be additional compliances / processes /
activities to be undertaken to be GST compliant as may be prescribed under the GST law.

Job Work Under GST  

Taxpayers will have various modes to file the statements and returns. Firstly, they can file their statement and returns directly on the Common Portal online. However, this may be tedious and time taking for taxpayers with large number of invoices. For such taxpayers, an o?ine utility will be provided that can be used for preparing the statements online after downloading the auto populated details and uploading them on the Common Portal.

GSTN has also developed an ecosystem of GST Suvidha Providers that will integrate with the Common Portal.

Job Work Under GST  

GSP will be required for companies with large quantum of transaction. Invoice wise details needs to be uploaded to the GSTN system which would not be manually possible. There would be restriction on the size of data that can be uploaded on GSTN at one time. GSP will provide a secured line to companies for uploading of data (invoice wise details into the GSTN). Hence GSP is required as mandated and approved by GSTN.

Data has to be transmitted to the GSTN in a particular script which is JSON script. Application Service Providers (ASP) will provide value added services for collating the data, data validation, reconciliation of data uploaded by vendors with purchase data as per the Company’s ERP. ASP is not mandated or certified by GSTN. However given the requirement of reconciliation of invoice wise details uploaded by the vendor with the purchase register maintained by the recipient Company, unless the process of return filing is completely automated it would be a real challenge to do compliances within the period provided for the same.

Job Work Under GST  

Sl No.TopicDOWNLOAD LINK
1.Schedule of GST rates for services CHECK HERE
2.GST Tariff Code in Uttar Pradesh CHECK HERE
3.Complete Details on GST CHECK HERE

Check here for more GST Offline Utilities – Click

Check here to know more on GST Delivery Challan :

SL NO. TOPICSLINK
1.GST Delivery Challan Excel format 1CHECK HERE
2.GST Delivery Challan Excel format 2CHECK HERE
3.GST Delivery Challan PDF formatCHECK HERE

For more on GST and Job Work Under GST log onto www.cakart.in

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