Input Tax Credit on Job Work & Procedures for GST ITC-04
What? is- job work
Job work refers to processing or working on semi-finished raw material goods supplied by the principal manufacturer to the job worker. This is to complete a part or whole of the process which results in the manufacture or finishing of a job or procedure.
For example, big garment manufacturers (principal) send out the half-made clothes to smaller manufacturers (job worker) to fit buttons & stitching. The job workers send back the garments to the principal manufacturer after completion of the job.
As per the GST Act, job work means any treatment or process undertaken by a person on goods belonging to another registered person. The person doing the job work is called job worker.
ITC for job work
The principal manufacturer will be allowed to take credit of tax paid on the purchase of goods sent on job work.
However, Taxpayer has to fulfill certain conditions.
- Place of business
- ITC will be allowed in both the cases
- Effective date
- Is there a time limit for the principal manufacturer to receive back the goods?
- Yes. The principal manufacturer must receive the goods back within the following period:
- For Capital Goods- 36 Months from the effective date
- For Input Goods- 12 Months from the effective date
if the goods are not received in the given time?
If goods are not received within the period as mentioned above, such goods will be deemed as supply (Sale) from an effective date. Such a Case is treated as deemed supply & the principal manufacturer will have to pay GST on such deemed supply.
The challan/Estimate/any other document issued will be treated as an invoice for such supply.
if the principal directly sells from the job worker’s place?
The principal manufacturer can supply the goods from the place of business of a job worker only if he (the principal) declares such a place of business as his additional place of business.
This rule does not apply for the following-
(i) The job worker is registered separately as a taxpayer.
(ii) The principal supplies goods which are specifically notified by the Commissioner to be allowed to sell directly from the job worker’s place.
What?- is GST ITC-04
ITC-4 under GST is a form that has to be furnished by Principle manufacturers, showing the details of inputs or capital goods dispatched or received from a job worker in a particular quarter.
FORM GST ITC-04 must be submitted by the principal every quarter. He must include the details of Input or Capital Goods & challans in respect of the following-
- Goods dispatched to a job worker or
- Received from a job worker or
- Sent from one job worker to another
- supplied from the premises of job workers in the quarter
When?- Due date of FORM GST ITC-04
ITC-04 is a quarterly form. The Regular Deadline for the form will always be on or before the 25th day of the month succeeding the quarter subject to the extension.
For example, for the Oct-Dec quarter, the due date is 25th Jan.
There is no GST ITC-04 late fees as such. However, is a manufacturer does not furnish the details in time, his ITC will be affected.
How?- TO furnish Details in ITC-04
The Return Contains TWO Parts
- Goods sent to job worker
- Goods received back from the job worker
Also, Show the details of inputs/capital goods sent for job-work
Various details must be mentioned such as GSTIN, challan number, tax amount, etc. All details will be available from the challans.
Goods received back from a job worker or sent out from the business place of job-work
The details of the goods received back will be mentioned here. The goods may be received by the principal or sent to another job worker directly from the first job worker’s place of business.
All details of original challans and new challans must be mentioned.
HOW?- filing of gst ITC-04 on gst portal
Here’s a step-by-step guide on filing on the GST PORTAL.
Go the Services>>Returns>>ITC Forms
Go to “Prepare Offline”
Once invoices are uploaded then click ‘Initiate Filing’.
Select the tax period.
Check the taxable amount and other details.
Finally, file the return with DSC or EVC as applicable.
A considerable amount of time has been provided by the government to the job workers for returning goods to the principal holder. GST will help in maintaining transparency in the details of input credit on goods sent for job work.