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Understanding the most misunderstood form in GST -  FORM ITC-04

Treatment of Job Work in GST and Form ITC-04

What is Form GST ITC-04?

As per Rule 45(3) of CGST Rules, every Principal sending their inputs, semi-finished goods or capital goods to the job worker for any type of job work is required to file a quarterly return in FORM GST ITC-04.

The details of challans in respect of goods dispatched to a job worker or received from a job worker during a quarter are required to be reported in FORM GST ITC-04.

It is a mandatory compliance to take input tax credit of goods sent on job work.

Who is required to file FORM GST ITC-04?

Liability to file FORM GST ITC-04 lies with the Principal, who is sending goods to job worker. It is to be noted that Job worker is not required to file FORM GST ITC-04.

Due date of FORM GST ITC-04?

As per Rule 45(3) of CGST Rules, FORM GST ITC-04 is required to be filed on or before the 25^th day of the month succeeding the relevant quarter.

E.g. Due date of Form ITC-04 for quarter ending June 2020 is 25^th July 2020.

Can Principal send goods under challan instead of tax invoice?

As per Rule 55(1) of CGST Rules, for the purpose of transportation of goods for job work, the consigner may issue a delivery challan in lieu of invoice at the time of removal of goods for transportation. A proper challan is required at the time of removal of goods from the place of principal. Below details are mandatory to be mentioned on challan:

1. Date
2. Challan number
3. Name, address and GSTIN of manufacturer who is sending the goods and job worker who is receiving the goods
4. HSN and description of goods
5. Quantity, Taxable Value, GST Rate, Tax Amount.
6. Place of supply
7. Signature

What is Job Work?

As per Section 2(68) of CGST Act, “job work means any treatment or process undertaken by a person on goods belonging to another registered person and the expression job worker shall be construed accordingly”

The person doing the job work is called job worker.

Example:

1. If a cloth manufacturer sends fabric to another person for fabrication, printing, fixing button etc. then this activity will be considered as job work within the meaning of section 2(68) of CGST Act.
2. In an another example, when a papad manufacturer sends raw material to several household ladies, and in return receives papad, same will also be considered as job work.

Maximum time limit for which goods can be sent on job work?

As per Section 143(1) of CGST Act, the principal has got limited time of one year for inputs and three year for capital goods to either bring back the goods back to the place of principal or to supply the goods directly from the place of job worker.

Period of one year or three years shall be reckoned from the original date, when the same were originally sent by principal to job worker.

Exceptions where time limit of one year / three year as prescribed in section 143 is not applicable?

There are certain tools/items on which condition of bringing back the goods is not applicable e.g. moulds and dies, jigs and fixtures, or other tools etc which are required to perform job work.

Conditions for direct supply of goods by the principal from the place of job worker?

Any principal shall not supply goods from the place of job worker unless the principal declares the place of business of the job worker as his additional place of business except where the job worker is registered under section 25 or where the principal is engaged in the supply of such goods as may be notified by the Commissioner.

Extension of time limit as prescribed in section 143?

The above period may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding one year and two years respectively.

Consequences if goods are not retuned back or supplied by the principal within the time limit as prescribed in Section 143 of CGST Act?

As per Section 143(3), 143(4) of CGST Act and Rule 45(4) of CGST Rules, where the inputs or capital goods are not returned back to the principal place or not supplied by the principal directly from the place of job worker within the time stipulated in section 143, it shall be deemed that such inputs or capital goods had been supplied by the principal to the job worker on the day when the said inputs or capital goods were sent out and the said supply shall be declared in FORM GSTR-1 by the principal and the principal shall be liable to pay the tax along with applicable interest.

How to prepare FORM ITC-04?

ITC-04 is divided in 4 parts:

1. Goods sent to job worker
2. Goods received back from the job worker, losses and waste.
3. Details of goods received back from job worker other than the job worker to whom such goods were originally sent for job work, losses and waste
4. Details of goods sent to job worker and subsequently supplied from premises of job worker, losses and waste

Preparing Form ITC-04

Table-4 (Part 1):

1. GSTIN of Job worker or state if job worker is not registered
2. Job worker’s type ( SEZ or NON SEZ)
3. Challan number
4. Challan date in dd-mm-yyyy format
5. Type of goods (capital goods or inputs)
6. Description of goods
7. Unique quantity code (UQC)
8. Quantity
9. Taxable value (amount in rupees)
10. IGST rate %, CGST rate%, State/UT rate% (which ever is applicable)
11. Cess if any

Table-5A (Part 2):

1. GSTIN of Job worker or state if job worker is not registered
2. Original challan number issued by principal  manufacturer & original challan date/challan number issued by job worker& challan date issued by job worker

Note: Either 1 of challan details is mandatory

3. Nature of job work done
4. Description of goods
5. Unique quantity code (UQC)
6. Quantity
7. Losses and waste (UQC and quantity)

Table-5B (Part 3):

1. GSTIN of Job worker or state if job worker is not registered
2. Original challan number issued by principal  manufacturer & original challan date/challan number issued by job worker& challan date issued by job worker

Note: Either 1 of challan details is mandatory

3. Nature of job work done
4. Description of goods
5. Unique quantity code (UQC)
6. Quantity
7. Losses and waste (UQC and quantity)

Table-5C (Part 4):

1. GSTIN of Job worker or state if job worker is not registered
2. Original challan number issued by principal  manufacturer & original challan date and invoice number issued by principal manufacturer and  invoice date (Note: invoice details are mandatory)
3. Nature of job work done
4. Description of goods
5. Unique quantity code (UQC)
6. Quantity
7. Losses and waste (UQC and quantity)

Nicely presented

Dear,

If I send Machinery to Job Worker location, this machinery will be used for manufacturing process of principal manufacturer and not for job work process then It will applicable ITC-04?

Replied to Roshan Gupta

Hi,

Prima facie, it seems to be covered under ITC-04.

We also provide written opinion on tax matters after case study, which is on chargeable basis. You may contact us for the same.

Kind Regards
TaxReply Team

We undertake Jobwork for pharma products. At what Value shall the we as Jobworker send the goods back to the Principle.

We charge only Labour charges for the job work done. We send goods on delivery challan along with the Inv of job charges. And the ewaybill is created by our Principle on our Job charges. Is this correct

Replied to Anoop Mangal

Hi,

Taxable value of goods is required in every challan as per GST law.

Eway bill is for movement of goods and can be created by either party.

Further analysis requires case study, which is on chargeable basis. If you wish to avail our services, please contact our team.

Kind Regards
TaxReply Team

SIR , WE GIVE SOME CONTRACT WORK TO A CONTRACTOR WHO WORKS IN OUR FACTORY PREMISES FOR CUTTING GARMENTS AND STITCHING PRESSING GARMENTS IN HOUSE OUR FACTORY WHETHER WE HAVE TO FILE ITC-04

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