Job Work
Job Work under GST is defined under Section 2(68) of the CGST Act, 2017 as any treatment or process undertaken by a person (the job worker) on goods belonging to another registered person (the principal). The key characteristic is that ownership of the goods always remains with the principal — the job worker only provides a service on those goods.
Common examples include textile processing, jewellery polishing, printing, component assembly, and pharmaceutical manufacturing on a contract basis.
Key Parties Involved
- Principal: The registered GST taxpayer who owns the goods and sends them for processing.
- Job Worker: The person (registered or unregistered) who performs the processing or treatment on the goods.
GST Provisions for Job Work
Job work is governed by Section 143 of the CGST Act, 2017, which lays down specific rules for sending goods to a job worker and bringing them back.
Sending Goods to a Job Worker
A principal can send inputs or capital goods to a job worker without payment of GST, provided the goods are sent under a delivery challan (not a tax invoice). The principal must also declare the job work details in their GSTR-1.
Return of Goods
The goods must be returned to the principal (or supplied directly from the job worker's premises) within the following time limits:
| Type of Goods | Time Limit for Return |
|---|---|
| Inputs | 1 year from the date of sending |
| Capital Goods | 3 years from the date of sending |
If goods are not returned within the prescribed time limit, the original sending of goods is treated as a supply and GST becomes payable from the date the goods were sent.
ITC on Goods Sent for Job Work
The principal can claim Input Tax Credit (ITC) on inputs and capital goods sent to a job worker, even if those goods are not in their direct possession — as long as the job work conditions under Section 143 are followed.
Job Worker's GST Registration
- A job worker does not need to be GST-registered if their annual turnover is below the threshold limit (₹20 lakh for services; ₹40 lakh for goods in most states).
- If registered, the job worker charges GST on their processing charges (the service fee), not on the value of the principal's goods.
Supply Directly from Job Worker's Premises
Under certain conditions, a principal can supply goods directly from the job worker's premises to the end customer. For this, the job worker's premises must be declared as an additional place of business by the principal, or the job worker must be registered under GST.
Documents Required
- Delivery Challan (when goods are sent to the job worker)
- Job Work Invoice (issued by the job worker for their processing charges)
- GSTR-1 declarations by the principal for goods sent and received back
Job work is distinct from a sale. No ownership transfer happens — only a service is rendered. This distinction is critical for correct GST treatment.