What Is Job Work Under GST in India and Its Applicable GST Rates?

Name: Job Work Under GST: Everything You Need to Know
Brand: Axis Max Life Insurance
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Job work as defined under the CGST Act 2017 is ‘any treatment or process undertaken by a person on goods belonging to another registered taxpayer’. In simple words job work refers to the outsourcing to an

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Written by

Abhishek Chakravarti

BFSI Writer

Abhishek is a financial writer with over 6 years of experience in the BFSI sector. Prior to his current stint with Axis Max Life Insurance, he has worked with leading fintech startups. He specializes in writing about taxation and various investment products like ULIPs, retirement plans, guaranteed investment plans, mutual funds etc.

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BFSI Expert

Sahil Rawal is a digital & brand management specialist with over 10 years of experience in Financial Services Industry. Life insurance professional with expertise in digital marketing strategy, website content marketing and brand communication designed to increase brand awareness, drive engagement & sales.

Applicable GST Rates for Job Work

Based on the types of goods and processes involved, different rates of GST apply to job work. The applicable GST rates for various job work types are listed below:

Job work related to cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products or agricultural produce - 0% or Nil
Job work related to newspaper printing, textile yarns and textile fabrics, Cut and polished diamonds, printing of books, journals or periodicals AND Processing of hides, skins and leather falling under Chapter 41 of HSN - 5%

What Is the GST Registration Requirement for Job Workers?

In India, the rules for GST registration for employees are governed by the Goods and Services Tax Act. Job employees operate on goods owned by other registered persons (principals). The major ideas on the requirements for GST job work are as follows:

Registration requirements

Employees must register under GST if their total revenue exceeds the set threshold limit. This threshold limit is Rs. 20 lakhs for most states and Rs. 10 lakhs for special category states. However, these cutoffs could change at any time, so reviewing the most recent job work GST rates in India is crucial.

Voluntarily signing up

Job employees can voluntarily register under GST even if their turnover is below the threshold. Participating in the formal economy and receiving an input tax credit are two advantages of voluntary registration.

Input tax credit for job workers

The input tax credit on the inputs and raw materials used for job work is available to registered GST job workers. This can lessen their tax obligation and improve how smoothly the credit moves across the supply chain.

Personalised GSTIN

Upon registration, the job worker receives a unique Goods and Services Tax Identification Number (GSTIN). The GST registration number must be used in all transactions.

Keeping track of compliance

Registered job employees must maintain accurate records of the supplies they receive for job work, the tasks they complete, and the collections they return to the principal. It is essential to abide by GST requirements, including timely submission of returns, to avoid fines.

Employee returns

Employees may need to file the GSTR-1, GSTR-3B, and other returns depending on their business operations and earnings. These returns detail the supplies bought, the taxes paid, and the input tax credits utilised.

Modifications to job work activities

If a job worker expands their operations or engages in additional activities that make their total yearly revenue surpass the threshold, they must apply for GST registration.

Job work expenses liable for GST

Employees' fees or charges in return for their services are subject to GST. The sort of work being done determines the GST rate that will apply.

GST Returns to be Filed under Job Work

The following GST forms/documents come into usage in relation to job work under GST:

GST ITC-04

This Form GST ITC-04 is to be submitted by the principal on a quarterly basis. It must consist of challan details w.r.t. goods dispatched and/or goods received from job worker or goods sent from one job work to another job worker. GST ITC-04 due date is 25th of the applicable month (i.e. the month succeeding the quarter).

Challan

Following points are important w.r.t. challan for job work under GST -

Goods sent for job work must have proper challan
Must be issued by principal
Details of challan must be mentioned in GSTR-1 and GST ITC-04
Challan must include:

Date of challan
Number of challan
Name, address and GSTIN of the consigner and consignee
HSN code of goods sent
Description and quantity of goods sent
Taxable value, tax rate and tax amount
Place of supply and signature of principal

GST Form TRAN-1

Must be submitted by job worker and principal manufacturer, both
Details of stock held of principal manufacturer by the job worker must be mentioned in this form

What is the Procedure under GST for Job Work?

To comply with the applicable laws, businesses and taxpayers in India must adhere to a set of procedures under GST. The GST process consists of several steps, including registration, filing returns, and claiming input tax credits. Here is a summary of the normal process for getting GST job work:

Registration

Businesses that generate more revenue than the required level must register for GST. Information about the company, its owners, and other pertinent details is required throughout the registration procedure. A distinctive GSTIN (Goods and Services Tax Identification Number) is given after registration.

Job work

The necessary commodities must be delivered to the contractor with the appropriate paperwork if a company uses contract labour. The finished products must be returned within the allotted time range.

Delivery Challan

Upon completion of job work, job worker is to update delivery challan and send it back to principal manufacturer.

Issuance of tax invoices

Registered enterprises must issue tax invoices for the supply of goods and services. Specific information must be included on these invoices, such as the GSTINs of the supplier and recipient, a description of the products or services, and the applicable job work GST rates.

Payment of tax

Output taxes must be paid to the government by the deadline in order to avoid penalties. It's essential to ensure precise tax calculation and prompt payment to prevent fines.

Claim Input Tax Credit (ITC)

Businesses can offset their output tax obligation by claiming input tax credits on the GST they paid for purchased goods and services. The supplier's GST information and pertinent documentation must be to receive ITC.

Filing Returns

GST returns must be filed regularly. The frequency of submitting returns varies for various taxpayer types. GSTR-1 is for supplies going out, GSTR-2 is for supplies coming in, and GSTR-3 is a combined return. However, the procedure for filing returns has changed over time, and now taxpayers must submit several forms depending on their category.

Refunds

Businesses may submit refund requests using the approved process when they have overpaid taxes or accumulated input credits.

Audit and assessment

The correctness of the taxpayer's records and compliance with job work GST rates in India can be checked by tax authorities through audits and assessments.

Compliance and record-keeping

For GST compliance and to make audits easier, accurate records of all transactions, invoices, and related documents must be kept.

FAQs about Job Work under GST

What is the GST rate for Job Work?