Input Tax Credit on Job Work and ITC-04
Deliverables - Timeline
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Deliverables
GST Return Copy
GST Workings
Challan copy in case of Payment made
Compliance Report
Timeline
10 Days
(from receipt of all documents)
What is job work?
Job work means processing or working on raw materials or semi-finished 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 an article or any other essential operation. For example, big shoe manufacturers (principal) send out the half-made shoes (upper part) to smaller manufacturers (job workers) to fit in the soles.
Input tax credit on job work
The principal manufacturer will be allowed to take credit for tax paid on purchase of goods sent on job work.
Input tax credit on job work
The principal manufacturer will be allowed to take credit for tax paid on purchase of goods sent on job work.
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:
1. Capital Goods- 3 years from effective date
2. Input Goods- 1 year from effective date
What happens if the goods are not received within the specified time?
In case goods are not received within the period as mentioned above, such goods will be deemed as supply from the effective date. The principal manufacturer will have to pay tax on such deemed supply. The challan issued will be treated as an invoice for such supply.
All about form ITC-04
Form GST ITC-04 must be submitted by the principal every quarter. He must include the details of challans in respect of the following-
1. Goods dispatched to a job worker or
2. Received from a job worker or
3. Sent from one job worker to another
Due date of Form GST ITC-04
ITC-04 was a quarterly form until September 2021. It had to be furnished on or before the 25th day of the month succeeding the quarter. For example, for the Jul-Sept quarter, the due date is 25th October 2021.
However, with effect from 1st October 2021, it is a half-yearly and yearly form as follows:
1. Those with an annual aggregate turnover of more than Rs.5 crore – Half-yearly from April-September- due on 25th October and October-March due on 25th April.
2. Those with an annual aggregate turnover of up to Rs.5 crore – Yearly from FY 2021-22 due on 25th April.
Details to be furnished in ITC-04
There are 2 parts-
1. Goods sent to job worker
2. Goods received back from the job worker
Summary of conditions for claiming ITC on goods sent for job work
A. Goods can be sent to job worker:
1. From principal’s place of business
2. Directly from the place of supply of the supplier of such goods
3. ITC will be allowed in both the cases.
B. Effective date for goods send depends on place of business:
1. Sent from principal’s place of business- Date of goods sent out
2. Send directly from the place of supply of the supplier of such goods- Date of receipt by job worker
C. The goods send must be received back by the principal manufacture within the following period:
1. Capital Goods- 3 years
2. Input Goods- 1 year
D. In case goods are not received within the period mentioned above, such goods will be treated as supply from the effective date and tax will be payable.
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FAQs
Where the job worker sends goods from to another job worker, the same conditions shall apply as the principal manufacturer. Accordingly, the job worker can endorse the challan issued by the principal to indicate the quantity and description of goods when he sends goods to another job worker. The job worker must file GSTR-1 and GSTR-3B like any other taxpayer.
