A guide on Job Work under GST

The Job-worker plays an important part in the economy of India because of their participation in the processing of input or unfinished goods. Central Excise defines the Job-work under GST already. Under GST provisions, its the duty of the Principal (the owner of the goods) to take care of GST Compliances on the Job-Worker’s behalf. In consideration of the fact that Job-work under GST is not made to comply with the structure of the tax and is most often in the MSME Sector.

What is a job work under GST? 

Section 2(68) of the CGST Act, 2017 defines the ‘Job-work’ as “any treatment or process undertaken by a person on goods belonging to another registered person”. Consequently, the person (registered or unregistered) who is in charge of treating or processing the goods of another registered person and the owner of the goods is the job worker and is called the principal in this regard. 

Rate of GST on Job work:

The rate on engineering job work under GST has been reduced from 18% to 12% now, as commenced by the GST Council. Meanwhile, the diamond supply job work GST rate has been changed to 1.5% from the earlier rate of 5%.

The GST Circular 126/45/2019 clarified that all the registered taxpayers job work under GST will be levied with the GST rate of 12%, which is why the unregistered taxpayers under job work are to be levied with an 18% rate of GST.

The Responsibilities of the Principal:

1. For the inputs or capital goods, a challan is issued by the principal to job-worker

2. Must maintain the inputs and capital goods accounts

3. Must intimate the jurisdictional officer of the details of the input goods and nature of the processing

4. In the case of export of the goods to a third party directly and when the job worker is not registered under GST, then the principal must declare the premise of job worker as an additional place of his business.