By M.K Gandhi /
The concept of JOB WORK is now assuming greater importance in the taxation domain in the wake of introduction of the new taxation regime of the Goods and Service Tax (GST). The incidence of taxation on account of JOB WORK under the new tax regime of GST will have to be understood in the right perspective by all the stakeholders engaged in the process of business transactions.
Now let us try to understand what is JOB WORK.
JOB WORK is a common term being used in almost every business. As per the GST Act the Job work is defined as any treatment or process being carried out by a person on the goods belonging to another person, who is originally supplying the goods as an individual or entity registered as per the GST provisions.
A registered person can send the goods to job worker without payment of GST and to another job work subsequently only if goods are delivered back within one year.
However, in such cases where the registered person is placing orders for job work along with the machineries which will be required for conducting job work, such machineries must be delivered back within 3 years of supplying such machineries, which fall under nomenclature of capital goods.
If the registered person is supplying parts like moulds, jigs and fixtures, then there is no condition to bring back these goods. If inputs and capital goods are not delivered back within 1 or 3 years, it shall be deemed that such inputs or capital goods had been supplied by the registered person, who had placed orders with the job worker on the day when these were sent out for job work purpose.
The job worker can dispatch the value added goods directly from his/her principal place of business of job- work only on the direction of registered person, who has placed the order of job work. But the basic condition in such cases is that the concerned job worker must be registered under the GST provisions.
However, if job-worker is not registered, the registered person who, places the order with the job worker, need to show job-worker as additional place of business to send the goods directly.
The goods supplied by the registered person, who places the order for the job work, will be treated as his/her turnover, if the concerned job-worker is registered.
The goods will have to be sent by the registered person who places the order to job worker by annexing delivery challan. The detail of such delivery challan should be given in GSTR-1.
The detail of goods sent for job-work and received back will have to be intimated to the tax authorities in the prescribed form GST ITC-04.
Writer is President All India Tax Advocate’s Forum, New Delhi