Job Work under GST

The activity of job worker has always been intriguing whether under the Excise Laws, Service Tax laws or today under the GST law. Here we shall cover the understanding with respect to the job work and his activities, compliance under GST, compliance for Principal while getting the services from a job worker and other related issues.

What Is Job Work And Who Is A Job Worker?

As per sec 2(68) of CGST Act, 2017 “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.

In other words, Job work means processing or working upon of raw materials or semi-finished goods supplied to the job worker, so as to complete a part or whole of the process resulting in the manufacture or finishing of an article or any operation which is essential for the aforesaid process.

Previous regime

If the process of job work amounts to Manufacture:

If the work undertaken by the job worker constitutes to be manufacturing or deemed manufacturing then the Job Worker used to be liable for the payment of excise duty. However, if the raw material supplier furnished a declaration under notification no. 214/86 (this notification shifts the burden of excise duty from Job worker to the Raw Material Supplier) then the liability to pay duty on job workers ceases to exist.


If the Process of job work does Not amount to Manufacture

If the process does not amount to manufacture then the said job worker used to be liable to pay service tax and the job worker was required to register under Service Tax.


New regime i.e. under GST Law

Registration compliance for ‘Job worker’

Under GST the job work is specifically classified as a service, the job worker would be required to obtain registration if his aggregate turnover exceeds the prescribed threshold just like any other person.

The Job worker shall be liable to pay GST only on the value of service portion. The supply of goods, after completion of job work, by a registered job worker shall not be included in the aggregate turnover of the registered job worker as the supply of said goods shall be treated as the supply of goods by the principal. However, the value of goods or services used by the job worker for carrying out the job work will be included in the value of services supplied by the job worker.

In certain cases, Job contract can be initiated by a principal with a third-party job work service provider by declaring the premises of the job worker as additional place of business in the GST registration. In case the job worker is already registered under GST, then declaring the premises of the job worker under additional place of business is not required.

Special Conditions for Job Worker under GST

The Job work is prescribed under Section 143(1) of the CGST Act which are as follows:-

  • A principal manufacturer may send any inputs and/or capital goods, without payment of tax, to a job worker for job work and from there subsequently to another job worker(s)

Provided that the principal manufacturer bring back such inputs/capital goods after completion of job work or otherwise within 1 /3 year/(s) of their being sent out. 


The principal manufacturer shall supply such inputs/capital goods after completion of job work or otherwise within 1 / 3 year/(s) of their being sent out, from the place of business of a job worker on payment of tax within India or with or without payment of tax for export.

In case if the inputs/capital goods supplied have not been received back by the principal manufacturer within 1 / 3 year/(s) then the original transaction would be treated as supply and the principal would be liable to pay tax accordingly.

The condition of bringing back capital goods within three years is not applicable to moulds, dies, jigs and fixtures or tools.


  • In case where principal removes the goods directly from the premises of the job worker without bringing it back to his own premises then the principal has to declare the premises of the job worker as his additional place of business. However following are the exception of the said condition:
  1. If the job worker is registered dealer;
  2. Where the principal is engaged in the supply of such goods as may be notified by the Commissioner.
  • In case of any waste and scrap generated during the job work, it may be supplied by the job worker directly from his place of business on payment of tax, if such job worker is registered, or by the principal, if the job worker is not registered.
  • The responsibility for keeping proper accounts for the inputs or capital goods shall lie with the principal

Procedure and Compliance under GST          

A. Goods send out for job work must be accompanied with a Challan.

B. Goods send must be received back by the principal within the period mentioned below:

  • Inputs, semi-finished or finished goods- 1 year
  • Capital Goods- 3 years ,

    Of being send out by the principal to the job worker.

C. In case where the goods send have not been received back within the period as mention above such goods will be treated as supplied to the job worker by the principal. Further tax will be required to be paid by the principal on such deemed supply.

D. Principal may on his own will

  • Receive back the goods after processing from job worker,
  • Supply to his customers from the place of business of job worker

Under both the situations ITC paid on purchase of goods send on job work will be allowed to the principal.

E. Waste and scrap generated during the initial process, intermediate process, assembly, packing or any other completion process may be sold on payment of tax by:

  • Job worker- if he holds a registration
  • Principal- if job worker does not hold a registration


Input Tax Credit for Job Work

Under GST, the principal is allowed to take input tax credit on goods supplied to the job worker. Also, the principal can take input tax credit on inputs / capital goods directly supplied to the job worker even without the goods being brought into the premise of the principal.


Transitional provision

Inputs, as such, or partially processed inputs which are sent to a job-worker prior to introduction of GST under the provisions of existing law [Central Excise] and if such goods are returned within 6 months from the appointed day [i.e. the day on which GST will be implemented] no tax would be payable.

If such goods are not returned within prescribed time, the input tax credit availed on such goods will be liable to be recovered. If the manufactured goods are removed, prior to the appointed day, without payment of duty for testing or any other process which does not amount to manufacture, and such goods are returned within 6 months from the appointed day, then no tax will be payable.

For the purpose of these provisions during the transitional period, the manufacturer and the job-worker are required to declare the details of such goods sent/received for job-work in prescribed format GST TRAN-1, within 90 days of the introduction of GST i.e., by 30th September 2017.

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