Job work is the backbone of a great deal of Indian manufacturing — textiles sent for dyeing, castings sent for machining, gems sent for cutting. GST accommodates it: a principal may send inputs or capital goods to a job worker without treating it as a supply. That accommodation is conditional, and the conditions are a document and a clock.
The two clocks
| Goods sent | Must return within |
|---|---|
| Inputs | One year |
| Capital goods | Three years |
| Moulds, dies, jigs, fixtures, tools | No limit |
If the goods do not return within the period, the original despatch is deemed to be a supply from the day it was sent — with tax and interest running from that earlier date, not from the day you noticed.
The document
Goods move on a delivery challan, not an invoice, since there is no supply. The challan must carry the particulars prescribed for it, and it travels with the consignment. Where the value crosses the threshold, an e-way bill is required as well — in both directions.
The job worker charges GST on their service, not on the goods. That is a separate supply, invoiced normally, and the principal claims credit on it in the ordinary way.
ITC-04
ITC-04 is the return in which the principal reports goods sent to and received back from job workers. Its filing frequency depends on turnover, with larger businesses reporting more often. It is the reconciliation the department uses to test whether the one and three-year clocks have been respected.
Keep a running job-work register rather than assembling ITC-04 from challans at the deadline. The register is also what tells you which consignments are approaching their limit while you can still act.
Two things that go wrong
- Goods sold directly from the job worker’s premises. This is permitted, but the job worker’s place must be declared as an additional place of business unless the job worker is registered. Selling from an undeclared premises is a separate problem from the time limit.
- Waste and scrap generated at the job worker’s end. It can be supplied from there by the job worker if registered, or by the principal if not — and it is a supply either way. Scrap left unaccounted is a routine audit finding.
If you manufacture and have never reconciled outstanding job-work consignments, that is the first place to look — see bookkeeping and MIS.
Where we come in
We build the job-work register and run ITC-04 so consignments are flagged before their limit rather than after. Relevant to our textile and jewellery clients especially.
This article is general information, not professional advice. Limits, rates and dates change by notification — confirm the position for your own year before acting on it.