Job Work means any treatment or process undertaken by a person on goods belonging to another person. The ownership of the goods does not transfer to the job worker, but it rests with the principal. The job worker is required to carry out the process specified by the principal on the goods. Persons carrying on the job work activity is termed as job worker.
For Example: Painting, Packing, Cladding, Fitting etc
Input Tax Credit on goods sent for Job Work
- Goods can be sent to job worker from the Principal place of business or directly from the place of supply of the supplier of such goods
- The Principal is entitled to take input tax credit on inputs and capital goods sent for job work even if the inputs are directly sent to job worker.
- If the goods sent on job work are not received back within the respective time limits, it shall be deemed supply from the principal to job worker on the date of goods sent or receipt of goods at job worker premises
Time Limit for receipt of goods from Job Worker to Principal
The goods sent by the Principal must be received by him in the following time limit.
Input Goods: The input goods should be received within 1 year
Capital Goods: The Capital goods should be received within 3 years
If the goods are sent from Principal Place of Business, the time limit of 1 year / 3 years should be from the date of goods sent
If the goods directly sent from place of supply of supplier of such goods: 1 year / 3 years should be from the date of receipt of said inputs at the job worker’s premises
Job Work Procedural Aspects
- A registered person (Principal) can send the goods to job worker under intimation and subject to certain conditions without payment of tax.
- After processing of goods, the job worker may clear the goods to
- Another job worker for further processing
- Dispatch the goods to any of the Principal’s Place of business without payment of tax
- Remove the goods on payment of taxes in India or without payment of tax for export outside India on fulfillment of conditions. It can be availed by the principal on declaring premise of the job worker as his additional place of business in registration.
- The above declaration is not required if the job worker is already registered under Section 25 or principal is engaged in supply of notified goods
- The Principal is required to intimate the jurisdictional officer containing the details of the description of inputs to be sent by the principal , nature of processing to be carried out by the job worker, details of other job workers etc
In case your business is handling Jobs Works under the purview of GST, consider speaking to Team EZTax.in GST to know more and help you be compliant and get the maximum ITC possible.
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