Category: Job Work

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I am a manufacturer of ready made garments. If I send any inputs to the job worker, will it be treated as taxable supply under the GST Act? Can I supply the goods after completion of job work from the place of business of the job worker?

  1. You can send your inputs or capital goods to a job-worker for job work without payment of tax and also bring back the same, after completion of job work, within one year or three years respectively.
  2. You can also supply the inputs or capital goods from the place of business of the job worker subject to the condition condition that you have to declare the place of business of the job-worker as your additional place of business if the job-worker is not a registered person.
  3. However, if the inputs or the capital goods, other than moulds and dies, jigs and fixtures or tools, which have been sent to the job-worker are not received back within the specified time period, it shall be deemed that you have supplied the inputs or capital goods on the day when you have sent it to the job-worker and you have to pay tax on such supply accordingly.

(FAQ-20 TEXTILES)

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We are manufacturing laminated textile under chapter 59. Previously, our product was exempted under Notification no. 30/2004-CE. But in States we were paying 4% VAT. Also we are doing job work of textile lamination for some customers. Our invoice value is sum total of raw material used for job work, labour charges and profit. Under GST regime: (a) Whether we will get input credit on material? (b) How can we make invoice, which rate, or we have to make two different invoice, one for material used for lamination and other for service charges?

(a) Yes. You would be eligible for credit of tax paid on
material used for job work.

(b) No. You are not required to raise two different invoices.
You would be raising one invoice similar one to what you
have been doing till now and GST at the applicable rate
will be charged on the invoice value. You can pay your tax
liability by using Input Tax Credit (ITC). However, invoice
should carry all the details as required by the CGST Act,
2017 and the CGST Rules.

(FAQ-10 TEXTILES)

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I have a manufacturing unit of Cotton trouser where customer gives me fabric and I have to convert it into trouser. What would be the rate applicable on me 5 % or 18 %?

The services provided by you fall under the category of job work by virtue of the definition of job work provided under Section 2 (68) of the CGST Act, 2017. The rate for job work in relation to trouser, which is a wearing apparel, is 18%.

(FAQ-8 TEXTILES)

Comments:  In GST Council meeting dated 05-08-2017 and Notification dated 22-08-2017, all types of Job work for textiles has been taxed at 5%

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How loan and licensee units carry out their operations in GST regime

GST law does not have any special provision for loan and licensee units. Where the contract are in the nature of performance of job-work, these units can opt to follow the procedure laid down in section 143 of the CGST Act, 2017 i.e. the principal can send any inputs etc. to such units without payment of tax and  the principal can clear the goods from the premises of such units if the principal declares these units as his additional place of business or where such units are themselves registered under section 25 of CGST Act, 2017.

[FAQ 4: Drugs and Pharmaceuticals]