Question 8 - What are the provisions concerning taking of ITC in respect of inputs/capital goods sent to a job-worker? - FAQ on GST dated 21.9.2016 based on Draft Model GST

Q 8. What are the provisions concerning taking of ITC in respect of inputs/capital goods sent to a job-worker? Ans. In the MGL, aspects relating to taking input tax credit in respect of inputs/capital goods sent for job-work have been specifically dealt in Section 16A, which provides that the credit of taxes paid on inputs or capital goods can be taken in the following manner: Principal shall be entitled to take credit of inputs sent to a job-worker if the said inputs, after completion of job-work are received back in 180 days from the date of being sent out. In case the inputs are sent directly to the job-worker, the date shall be counted from the date of receipt of inputs by job-worker. Further an amount equivalent to the input tax credit availed on such inputs has to be paid along with interest, in case the inputs are not received back within the specified time. The credit can be reclaimed when the inputs are actually received back.