This article examines the Goods and Services Tax (GST) implications, specifically regarding input tax credit (ITC) for goods dispatched for job work. Recent updates from September 24, 2021, via Central Tax Notification No. 35/2021, altered the ITC-04 form's filing frequency, effective October 1, 2021. Businesses with an annual aggregate turnover (AATO) exceeding Rs. 5 crore must file half-yearly (April-September by October 25; October-March by April 25). For businesses with an AATO up to Rs. 5 crore, the filing is annual (for FY 2021-22 onwards, due by April 25).

What is Job Work?

Job work involves processing or treating raw materials or semi-finished items provided by a principal manufacturer to another entity, known as a job worker. This process aims to complete a specific stage or the entire manufacturing process, culminating in a finished product or another essential operation. For instance, a large shoe manufacturer (the principal) might send incomplete shoes (e.g., the upper part) to smaller workshops (job workers) to attach the soles. Upon completion, the job workers return the finished shoes to the principal. Under the GST Act, job work refers to any treatment or process performed by an individual on goods owned by a different registered entity. The individual performing this work is termed a job worker.

Input Tax Credit on Job Work

A principal manufacturer is eligible to claim input tax credit (ITC) for taxes paid on goods acquired and subsequently dispatched for job work. This eligibility, however, is subject to specific conditions, which are detailed below.

Time Limits for Receiving Goods

Yes, the principal manufacturer must retrieve the goods within these periods:

• Capital Goods: 3 years from the effective date
• Input Goods: 1 year from the effective date

Consequences of Not Receiving Goods on Time

If the goods are not returned within the stipulated timeframe, they will be considered a supply from the effective date. Consequently, the principal manufacturer must pay tax on this deemed supply, and the challan issued for dispatch will serve as the invoice.

Direct Sales from Job Worker's Place

A principal manufacturer may directly sell goods from a job worker's premises only if the principal officially declares that location as an additional place of business. This requirement is waived if the job worker is already registered under GST, or if the principal is supplying goods specifically authorized by the Commissioner for direct sale from the job worker's site.

Machinery Sent for Job Work

Time limits do not apply to equipment such as molds, dies, jigs, fixtures, or tools when they are sent to a job worker for specific job work tasks.

Summary of ITC Conditions for Job Work

• Goods Dispatch: Goods may be dispatched to a job worker either from the principal's business premises or directly from the supplier's location. Input Tax Credit (ITC) is permissible in both scenarios.
• Effective Date: The effective date for goods sent from the principal's place is the dispatch date. For goods sent directly from the supplier's location, it is the date the job worker receives them.
• Return Period: The principal manufacturer must receive capital goods back within three years and input goods within one year.
• Non-Receipt Consequence: Failure to receive goods within these periods results in the goods being treated as a supply from the effective date, making them subject to tax.

Special Provisions for Job Workers and Filing

If a job worker further dispatches goods to another job worker, the same conditions governing the principal manufacturer apply. The initial job worker is permitted to endorse the challan provided by the principal, detailing the quantity and description of goods when sending them to a subsequent job worker. Furthermore, job workers are required to file GSTR-1 and GSTR-3B, similar to other taxpayers.

All About Form ITC-04

Form GST ITC-04 is a mandatory submission for the principal. This form requires quarterly submission, detailing challans for goods dispatched to a job worker, goods received back from a job worker, or goods transferred between different job workers.

Due Dates for Form GST ITC-04

Prior to October 2021, ITC-04 was a quarterly filing, due by the 25th day of the month following the quarter (e.g., July-September quarter due by October 25). Effective October 1, 2021, the filing frequency changed:

• Businesses with an annual aggregate turnover (AATO) exceeding Rs. 5 crore must file half-yearly: April-September (due by October 25) and October-March (due by April 25).
• Businesses with an AATO up to Rs. 5 crore must file annually: for FY 2021-22 onwards (due by April 25).

Details Required in ITC-04

The ITC-04 form comprises two main sections: details of goods sent to a job worker and details of goods received back from a job worker.

Details of Inputs/Capital Goods Sent for Job Work

This section requires input of critical information, including GSTIN, challan numbers, and tax amounts, all sourced from the relevant challans. This applies to both goods initially dispatched to the job worker and goods subsequently received back by the principal or forwarded to another job worker from the initial job worker’s premises. All associated original and new challan details must be accurately provided.

Guide to Filing ITC-04 on GST Portal

To file ITC-04 on the GST portal, follow these steps:

1. Access the GST Portal by logging in.
2. Navigate to "Services," then "Returns," and select "ITC Forms."
3. Choose "Prepare Offline" to upload invoices.
4. After uploading invoices, click "Initiate Filing."
5. Select the appropriate tax period for the filing.
6. Verify the taxable amount and all other provided details.
7. Complete the return submission using either a Digital Signature Certificate (DSC) or Electronic Verification Code (EVC), as applicable.

The government has allocated adequate time for job workers to return goods to the principal. GST aims to ensure transparency in input tax credit records for goods involved in job work.