Form ITC 04 Job Work: Section 19 of the CGST Act, 2017 defines provisions for input tax credit on job work under GST. Read our guidelines.
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What is Job Work & Form ITC 04?
As per section 2(68) of the Central Goods and Service Tax (CGST) Act, 2017 job work means “any treatment or process undertaken by a person on goods belonging to another registered person.”
In simpler terms, Job work means undertaking a process or working on inputs / raw materials / semi-finished goods provided by the principal manufacturer to the job worker.
In order to understand claiming of ITC on Job Work, it is essential to define what ‘Job Work’ is and what is NOT accounted as a job work.
In this section we will try to explain this concept with a simple example.
Any treatment or process performed by a person on products belonging to another registered person is considered job work according to Section 2(68) of the CGST Act, 2017. What this means, in a nutshell, is that the manufacturer sends the raw materials or semi-finished goods straight to the worker, who then processes them.
Job work with Example
Example –
For instance, ‘City Furniture’ contracts out some of its production to smaller factories.
City Furniture is making a table out of wood, and they've done all the necessary work to shape and finish it into a table.
The table is then passed on to a different manufacturer, ‘Bunty Traders’, who is responsible for painting it.
Using the criteria established by the CGST Act of 2017, City Furniture is the Principal and Bunty Traders is the Job Worker.
City Furniture is a registered business. ‘Bunty Traders’ has taken on the goods from this registered person to carry some further processes of painting and polishing.
This makes ‘Bunty Traders’ a ‘Job Worker’ as it has taken a job from a registered business.
Input Tax Credit (Form ITC-04) on Job Work
Section 19 of the CGST Act, 2017 defines provisions for input tax credit (Form ITC-04) that be claimed on inputs and capital goods sent for job work.
The provision states that Input Tax Credit can be availed by the principal manufacturer or the registered person in respect of goods (inputs or capital goods) sent for job work purpose.
However, it is not mandatory that the goods shall be first brought to the place of business of the principal manufacturer or the registered person before sending the same to the job worker.
Further Rule 45(3) of CGST Rules, 2017 states that every principal manufacturer is required to file Form ITC-04 wherein details of challans in respect of goods sent or received to / from a job worker or sent to another job worker shall be mentioned.Read more related articles:
Time limit to receive Goods from Job worker & Form ITC 04
The principal manufacturer shall receive goods within the time limit as mentioned below –
Example – In automobile industry, raw material alloy is sent to a third person for processing them into parts required for the final product.
This third person is called the job worker and the raw material provider is the principal manufacturer.
Effective date means -
Where goods are sent from principal manufacturer’s place of business | Date on which goods are sent to the job worker |
Where goods are sent from place other principal manufacturer’s place of business eg. Supplier | Date on which are received by the job worker |
Exception to time limit -
This rule does not apply in case of moulds, dies, jigs and fixtures or tools sent to a job worker for carrying out job work
Consequence of not receiving within Time limit -
Where goods are not received within the time limit as specified above, such goods shall be treated as supply from effective date and the principal manufacturer shall be liable to pay tax on such goods.
Challan issued for job work shall be treated as invoice for such supply.Direct Sale from Job Worker’s Place
Principal Manufacturer can directly supply goods from job worker’s place of business if principal manufacturer declares job worker’s place as his additional place of business.
However, he may not do so if –
Records to be maintained by the Principal Manufacturer
The responsibility for maintaining proper accounts and records lies with the principal manufacturer.
The principal manufacturer is required to issue challan for every dispatch made to the job worker. Details of such challan shall be disclosed and filed through Form ITC 04.
Details to be mentioned in Challan –
Challans are issued not only in case when goods are sent to job worker by a principal manufacturer but also when goods are sent from one job worker to another job worker.Challans are issued not only in case when goods are sent to job worker by a principal manufacturer but also when goods are sent from one job worker to another job worker.
Form ITC 04
Form ITC 04 contains details of inputs and capital goods sent to and received from a job worker. This form needs to be filed by every principal manufacturer who is sending goods for job work on quarterly basis.
In our next article we also broadly speaks on How to claim ITC on Job works you can refer this article for more information.
Details in this form are required to be updated on the basis of challan issued by the principal manufacturer for –
Due date of Form GST ITC 04
The due date for filing Form GST ITC 04 is the 25th day of the month following the quarter for which the return is to be filed.
Example – For quarter April to June, return is to be filed by 25th July
Filing ITC-04 on the GST Portal
Following are the steps to follow for filing ITC-04 on the GST portal:
Step 1: Login to the GST portal using your credentials.
Step 2: Now navigate to Services >> Returns >> ITC Forms
Step 3: Under ITC Forms, navigate to Prepare Offline >> Upload Invoices. After successfully uploading the invoices, now click on ‘Initiate Filing’.
Step 4: In this step, choose the Tax Period and the Taxable Amount.
Step 5: Now you can file the return using DSC or EVC as per your availability.
Form GST ITC 04 Components
Form GST ITC 04 is divided into 5 sections where Section 5 is divided further into 3 parts. Let us understand these sections in detail.
Basic Details of the Principal Manufacturer
These details are auto updated by the GSTN.
Details of inputs / capital goods sent for Job Work
The following columns are required to be filled by the principal manufacturer
Field | Description |
|---|---|
GSTIN of Job Worker | To be filled where job worker is registered. To be left blank where job worker is unregistered |
State | Mandatory in case of unregistered job worker |
Job Worker Type | Whether job worker is located in SEZ or Non SEZ area |
Challan Number | Mandatory Field. Challan number issued to the job worker. Maximum limit 16 digits. Alpha numeric characters |
Challan Date | Mandatory Field. DD-MM-YYYY format |
Goods Type | Mandatory Field. Whether goods are inputs or capital goods |
Description of Goods | Mandatory Field. Alpha numeric, special characters allowed. Maximum length 70 digits |
UQC | Mandatory Field. Unit of measurement of goods sent |
Quantity | Mandatory Field. Quantity of goods sent to job worker. Maximum length 13 digits and 2 decimals |
Taxable Value | Mandatory Field. Total taxable value as mentioned in the challan. Maximum Length 13 digits and 2 decimals |
Tax Rate | Mandatory Field. Depends on place of supply. Interstate – IGST, Intra state- CGST and SGST |
Cess | Cess amount to be filled if applicable. Maximum length 13 digits and 2 decimals |
Details of Inputs/capital goods Received Back From the Job Worker
In this table, details of goods received back from the job worker are required to be mentioned.
Field | Description |
|---|---|
GSTIN of Job Worker | To be filled where job worker is registered. To be left blank where job worker is unregistered |
State | Mandatory in case of unregistered job worker |
Original Challan number issued by the Principal | Details of challan number on which goods were sent to the job worker. This may not be filled if one to one correspondence is not available |
Original Challan date issued by the Principal | Details of challan date on which goods were sent to the job worker. This may not be filled if one to one correspondence is not available. DD-MM-YYY Format |
Challan Number issued by Job Worker | Mandatory if fresh challan number issued by the job worker. Maximum limit 16 digits. Alpha numeric characters |
Challan Date issued by Job Worker | Mandatory if fresh challan is issued by the job worker DD-MM-YYYY format. |
Nature of Job Work Done | Mandatory Field. Alpha numeric, special characters allowed. Maximum length 70 digits |
Description of Goods | Mandatory Field. Alpha numeric, special characters allowed. Maximum length 70 digits |
UQC | Mandatory Field. Unit of measurement of goods sent |
Quantity | Mandatory Field. Quantity of goods received from job worker. Maximum length 13 digits and 2 decimals |
UQC (Losses and wastes) | Unit of measurement of goods lost or wasted during processing |
Quantity | Quantity of goods lost or wasted. Maximum length 13 digits and 2 decimals |
Section 5B - Details of inputs / capital goods received back from job worker other than the job worker to whom such goods were originally sent for job work
This section is to be filled where goods sent to one job worker are received from another job worker. It means goods were sent from one job worker to another job worker for further processing.Field | Description |
|---|---|
GSTIN of Job Worker | To be filled where job worker is registered. To be left blank where job worker is unregistered |
State | Mandatory in case of unregistered job worker |
Original Challan number issued by the Principal | Details of challan number on which goods were sent to the job worker. This may not be filled if one to one correspondence is not available |
Original Challan date issued by the Principal | Details of challan date on which goods were sent to the job worker. This may not be filled if one to one correspondence is not available. DD-MM-YYY Format |
Challan Number issued by Job Worker | Mandatory if fresh challan number issued by the job worker. Maximum limit 16 digits. Alpha numeric characters |
Challan Date issued by Job Worker | Mandatory if fresh challan is issued by the job worker DD-MM-YYYY format. |
Nature of Job Work Done | Mandatory Field. Alpha numeric, special characters allowed. Maximum length 70 digits |
Description of Goods | Mandatory Field. Alpha numeric, special characters allowed. Maximum length 70 digits |
UQC | Mandatory Field. Unit of measurement of goods sent |
Quantity | Mandatory Field. Quantity of goods received from job worker. Maximum length 13 digits and 2 decimals |
UQC (Losses and wastes) | Unit of measurement of goods lost or wasted during processing |
Quantity | Quantity of goods lost or wasted. Maximum length 13 digits and 2 decimals |
Section 5C - Details of inputs/ Capital goods sent to job worker and subsequently supplied from premises of job worker; and losses and wastes
Where goods sent to job worker premises for processing have been subsequently supplied or sold directly from job worker’s premises, the details of such transactions is to be reflected here.
Field | Description |
|---|---|
GSTIN of Job Worker | To be filled where job worker is registered. To be left blank where job worker is unregistered |
State | Mandatory in case of unregistered job worker |
Original Challan number issued by the Principal | Details of challan number on which goods were sent to the job worker. This may not be filled if one to one correspondence is not available |
Original Challan date issued by the Principal | Details of challan date on which goods were sent to the job worker. This may not be filled if one to one correspondence is not available. DD-MM-YYY Format |
Invoice Number issued by Principal | Mandatory. Invoice number issued by principal for supply. Maximum limit 16 digits. Alpha numeric characters |
Invoice Date issued by Principal | Mandatory. DD-MM-YYYY format. |
Nature of Job Work Done | Mandatory Field. Alpha numeric, special characters allowed. Maximum length 70 digits |
Description of Goods | Mandatory Field. Alpha numeric, special characters allowed. Maximum length 70 digits |
UQC | Mandatory Field. Unit of measurement of goods sent |
Quantity | Mandatory Field. Quantity of goods received from job worker. Maximum length 13 digits and 2 decimals |
UQC (Losses and wastes) | Unit of measurement of goods lost or wasted during processing |
Quantity | Quantity of goods lost or wasted. Maximum length 13 digits and 2 decimals |
ITC-04 Job Works : FAQ's
Yes. The Principal can send the inputs and capital goods straight to the job worker instead of bringing it to his own location. In this case, the Principal can still get Input Tax Credit under GST for these inputs and Capital Goods.
Yes. It is possible to send the finished goods directly to the customer without sending them back to Principal's place of business.
But Principal must disclose the unregistered job-worker's premises as his additional place of business. However, if the Job-worker is a GST registered taxpayer, then the final finished goods will be supplied to the customer directly from the job worker's premises.
In the following situations, the principal can send the finished goods directly from the job worker's place of business to the receiving party without claiming the job worker's place of business as an additional place of business:
- If the Principal sells goods that the GST Commissioner has told them to sell,
- If the Job-worker is a GST registered business
The process for claiming an Input Tax Credit under the GST on ‘Job-work’ that the original manufacturer contracts out to a third party is described in Section 19 of the CGST Act of 2017 (Principal).
The principal manufacturer may claim an Input Tax Credit on the GST paid on the inputs he SENT to the ‘Job Worker’ if those inputs are qualified.
In order to claim the Input Tax Credit on the Job Work, Form GST ITC-04 must be submitted.
Every quarter, the 'Principal' manufacturer must file Form GST ITC-04.
For the following transactions, the Principal manufacturer must provide the following transaction details in the Challan:
- Unfinished items that are sent to a job worker
- Finished goods received from a job-worker
- Items transferred from one job worker to another
The goods shipped to the Job-Worker must be received within the allotted time range in order to qualify for claiming ITC on those items.
The time period is as follows:
- For CAPITAL GOODS – Within THREE years from the date when the goods were supplied to the Job Worker’s location.
- For INPUT GOODS – Within ONE year from the date when the goods were supplied to the Job Worker’s location.
If the Principal does NOT receive the supply of the finished goods within the time period as specified above, then the goods will be deemed as supply from the effective date.
The 'Principal' is liable to pay tax on this deemed supply & the GST Challan issued is considered the invoice receipt for this deemed supply.
According to Section 143(5) of the CGST Act of 2017, there are two possible ways to handle waste and scrap produced during job work:
- If the job worker is GST registered, he can supply the scrap directly from his place of business after paying tax.
- If the job-worker is not registered under GST, the principal should provide the scrap after the tax has been paid.
Yes. The job worker may receive intermediate or semi-furnished items from the Principal. Any intermediate goods obtained following treatment or processing by the Principal or the job worker are considered inputs.
The job works given to the job worker will include a GST Input Tax Credit claim from the Principal. Therefore, it is the Principal Business's responsibility to maintain accurate records of the task works provided and the finished goods received.
This will make it simpler for the Principal to obtain an Input Tax Credit for this particular job.
Job Work provisions and claiming of ITC on the same will be eligible only on the goods that are taxable and sent by a GST registered entity.
It is important to note that the Principal may ONLY follow the Job Work related provisions if he wishes to claim Input Tax Credit on the items supplied to the Job Worker.
No. The job worker and the Principal do not have to reside in the same state or union territory.
Both the IGST Act and the UTGST Act incorporate the CGST Act of 2017's provisions referencing the ITC on Job Work under GST. As a result, the Principal and the Job Worker may be in the same UT or State or in a separate UT or State.
Here, time limit to return the finished or semi-finished goods to the principal within THREE years after the effective date is NOT applicable.
This category includes capital goods like as fixtures, equipment, moulds, and so on.
Claim upto 100% Input Tax Credit
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