Job Worker under GST

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Employment in GST

Definition of Job Work:

Job Work is defined by Section 2(68) of the CGST Act, 2017 as “any treatment or process performed on goods belonging to another registered person.” The individual who performs the aforementioned task would be referred to as a “job worker.” The job worker does not acquire ownership of the goods; the owner is the principal. The worker is required to apply the procedure specified by the employer to the goods.

It involves the processing of goods supplied by the customer. In Central Excise, a principal manufacturer can send inputs or semi-finished goods to a job worker for further processing. Numerous facilities and procedural exemptions have been granted to both the job workers and the primary supplier who sends goods for job work. The idea is to make the principal responsible for meeting compliances on behalf of the job worker on the goods processed by him (job-worker), given that job workers are typically small individuals who are unable to comply with the specific legal provisions.

The GST Act makes special provisions regarding the removal of goods for job-work and the receipt of the goods back from the job-worker after processing without payment of GST. The benefit of these provisions shall extend to both the employer and the employee.

Procedural Aspects:

The following procedural aspects are involved in the Job Work process:

A registered person (Principal) may send inputs/capital goods to a job worker and from there to another job worker without paying tax, as long as certain conditions are met. Upon completion of the job, the goods may be returned tax-free. The employer is not required to reverse the ITC claimed on inputs or capital goods shipped to the employee.
The principal may send inputs or capital goods directly to the job worker without bringing them to his premises, and he may still claim the tax credit on such capital goods or inputs.
However, inputs or capital goods sent to a job work must be returned to the principal within one year and three years respectively of the date the goods were sent.
After processing goods, the job-worker may clear the goods to (a) Another job-worker for further processing; (b) any place of business of the principal without payment of tax; and (c) If certain requirements are completed, you can remove the items with tax payment inside India or without tax payment for export beyond India.

By designating the job-premises worker’s location as his additional place of business during registration, the principle can use the option of directly supplying goods to a third party from the job-premises worker on payment of tax in India as well as with or without payment of tax for export. It is not necessary to list the job-location worker as an additional place of business if the job worker is a GST-registered person.

Before supplying goods to a job worker, the principal would be required to inform the Jurisdictional Officer of the nature of inputs the principal intends to send and the type of processing the job worker will perform. The notification must also include the information of any additional workers if any.

The inputs or capital goods must be shipped to the contract worker with a challan issued by the principal. Even for inputs or capital goods sent directly to the job worker, a challan must be issued. The challan must include the information required by rule 10 of the Invoice Rules. The principal shall be responsible for keeping accurate records of the inputs or capital goods.

Credit for Taxes Paid on Inputs:

A person who supplies taxable goods to a job worker is entitled to a credit for taxes paid on inputs sent to the job worker for the job work. In addition, the provision allows the principal to claim the credit even if the goods were delivered directly to the employee without entering the principal’s premises. The principal need not wait until the inputs are initially delivered to his business location.

Time Limits for Return of Processed Goods:

Waste Clearing:

Waste generated on the job-premises worker may be supplied directly by the registered job-worker from his place of business upon payment of tax, or, if the job-worker is not registered such waste may be cleared by the principal.

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