GST on JOB work Charges, Goods and Services Tax - GST

[Narendra Soni]

Dear Expert,

Please suggest whether GST is applicable on Job Work Charges raised by Job worker.

Urgent reply is appreciated

Posts / Replies

[MUKUND THAKKAR]

labour charges (job work charges) is taxable under GST. if job worker is non registered than you have to pay the tax under RCM. and job worker is registered than he has pay to tax under GST. On job work charges.

[KASTURI SETHI]

I support the views of Sh. Mukund Thakkar, Sir. Job work is taxable service under GST.

[MARIAPPAN GOVINDARAJAN]

In this regard refer Section 143 of the CGST Act which describes the job work procedure.

[Narendra Soni]

Thanks Sir,

But, suppose a manufacturer has two units say A & B, located in same city(state) having single(same) PAN no and having single registration in GST (other unit is declared as additional place of business ). Whether job work charges are applicable in inter unit job working and if yes, whether such job work charges are liable to GST.

Please confirm at the earliest.

[Vipul Singh]

If a manufacturer has two units say A & B, located in same city(state) having single(same) PAN no and having single registration in GST (other unit is declared as additional place of business ) then issue of job work charges does not pop up because you are processing on your own goods. Job work in GST means undertaking any treatment or process by a person on goods belonging to another registered taxable person.

Hope its clear 

[Narendra Soni]

Sir, Please check again, as per my view,"Another registered person" does not mean that both the persons should have different registration.If our both the units are registered in a single registration, transaction may be treated as between another registered person.

Requested to Mukund Sir, Marriappan Sir, Kasturi Sir, Ganeshan Sir,Rajagopalan Sir...Sir....., please suggest.........

[MUKUND THAKKAR]

narendra Ji,

Final product of both units are same?

[KASTURI SETHI]

Sh.Soni Ji,. I am not studying GST. I shall study only after the date is confirmed. Still there is doubt about the date of implementation. Transporters and Bank Associations are requesting the Govt to postpone till 1.9. 2017. Let us wait for. No adverse effect till the date of implementation of GST.

[Narendra Soni]

Thanks Mukund Sir,

Both the units say A & B are manufacturing same products. Semi products say Tap and Fabric of unit 'A' is transferred in unit "B" under job work challan for making Bags,and the Bags has been exported directly from unit "B" (Permission form central excise has been taken in existing law). OR returned back to unit "A" if not exported. Job work challan is being set off accordingly. Presently no job work charges are raised unit "B" because both the units are covered under group company.

(This is present practice where both the units are separately registered in central excise).

Kindly suggest.

[MUKUND THAKKAR]

Dear soniji,

please do not panic much more. because there is no consideration is there no question under GST. secondly if your central excise registration is different but I think your Balance sheet will be common. central excise registration is separate because of requirement under central excise law.

But under GST your migration under same PAN number and allotted provisional ID is common. so do not worry job work charges is not applicable in your Transaction, as per fact given by you. just use different series of invoice for your internal identification and control.

[Vipul Singh]

Dear Narendra,

You are concerned with factory wise registration under central excise. Under GST this concept is no longer relevant. Manufacturing is no longer taxable events. Its supply that that is taxable event. In GST you are registered state wise and not factory wise. You need two GSTIN when you say two registered person.

[Narendra Soni]

Dear Mukund Sir,

Should we use Tax invoice of different series or Job work challan at the time of movement of goods from one unit to another unit.If we use Invoice than we have to charge GST at the time of movement between inter unit processing of RM/semi finished goods.

Kindly confirm your expert views.

[MUKUND THAKKAR]

Should we use Tax invoice of different series or Job work challan at the time of movement of goods from one unit to another unit.If we use Invoice than we have to charge GST at the time of movement between inter unit processing of RM/semi finished goods.

Need not raise the Tax invoice only job work challan is enough for the movements. which will be serially is must. you need to feed the details in GSTN. for movement of job work material.

[manish agarwal]

Dear expert

As earlier there in no Service tax when the cut components of fabric given by the party and we only stich it and return back to them , what is the current status after the GST applicable .

. In case where Cut Components Of Fabic is supplied and stitched by the tailor (us), whether this activity is manufacturing or service ? In whatever applicable case what would be the rate of the Tax ? under GST

[Radhakrishna S]

Sir,

I observed that experts confirm that Job worker should charge GST on his portion of process/ treatment. As I understood the sec 143 the Principal may send the inputs/ capital goods to job worker without paying tax and bring back without paying tax. within a period of 1 year. As we are a pharmaceutical manufacture we under take the job converting the ingredient or material supplied by another Pharmaceutical (which is called Loan Licensing) in to tablets/capsules/syrup we shall charge some amount for that. That shall include the processing, labour and also certain material which is required to be used to achieve final product that is tablet/capsule/syrup. As the main material is supplied by Principal and take back the finished product (definitely within an year) does Sec 143 is applied and no tax is charged or any other section specifies this and brings to GST to be charged. Kindly clarify.

[KASTURI SETHI]

In my view, Section 143 is applicable. Both (job worker and jobbee) are distinct persons. Rest depends upon the terms and conditions of the agreement between both.

[Radhakrishna S]

Sir,

I am not able to understand clearly about applicability of GST for Job work. As per sec 143 a principal can send inputs (some material I mean) to a Job worker under intimation and can bring back without paying tax within an year and within 3 year for capital goods. Here exactly I am confused when he is exempted from paying tax how do a job worker can charge him GST. Every where it is discussed and confirmed that service charges of job worker is chargeable. Can any body clarify. Is there any other thing than service charge of job work which would be taxable in the process.

[vijay kumar]

Dear Mr.Radhakrishna,

In your case, two supplies are involved. To the extent of your goods used in the jobwork, it is supply of goods to the Principal. To the extent of conversion of Principal's goods into tablets etc. it is supply of service as per Schedule II of CGST Act, 2017 (processing of other's goods). Put together, if the total value of supply exceeds ₹ 20 lakhs, you are required to obtain GST registration and pay the tax.

[vijay kumar]

I observed that experts confirm that Job worker should charge GST on his portion of process/ treatment. As I understood the sec 143 the Principal may send the inputs/ capital goods to job worker without paying tax and bring back without paying tax. within a period of 1 year. As we are a pharmaceutical manufacture we under take the job converting the ingredient or material supplied by another Pharmaceutical (which is called Loan Licensing) in to tablets/capsules/syrup we shall charge some amount for that. That shall include the processing, labour and also certain material which is required to be used to achieve final product that is tablet/capsule/syrup. As the main material is supplied by Principal and take back the finished product (definitely within an year) does Sec 143 is applied and no tax is charged or any other section specifies this and brings to GST to be charged. Kindly clarify.

Mr. Radhakrishna,

As per Schedule II, your activity of processing of other's goods is supply of service. Threshold exemption of ₹ 20 lakhs is applicable on your conversion charges+ cost of any material used by you. After that, you are liable to obtain GST registration and pay the tax. As far as principal is concerned, Section 143 provides for supply and getting back goods without payment of GST.

[Radhakrishna S]

Thank you Mr. Vijaykumar for your reply.

I am exactly coming to the point When as per sec 143 the principal can take back processed material from a job worker after completion of job work within an year without payment of GST. How shall he pay the GST charged by job worker for his services. Or what else possibility exist to charge any other GST. From which Principal is exempted as per 143.

[vijay kumar]

The GST is payable by the job worker on the conversion charges and not by the principal. Post-threshold exemption, JW will charge GST from the principal, who can take credit of the same and utilize the same for payment of tax on his outward supplies. Under Sn.143, the exemption available to Principal is from the supplies of unprocessed goods and receipt of processed goods.

[JSW CEMENT LIMITED]

In my opinion, in stead of opting for job work, you can supply RM/Inputs on payment of GST to Jobworker and subsequently after processing jobworker can supply the final jobworked product on payment of GST which will be inclusing of jobwork charges. But, in this case, the jobworker must get registered under GST. In case jobworker is not registered, exemption from payment of GST has been granted to principle supplier and not jobworker. Jobworker has to charge GST on his service of Job work which will be available as credit to principle supplier.

[MohanLal tiwari]

One of our Public sector customer is supplying used & rejected machinery part on job work basis for supply of fresh machinery part (castings) in job work basis. To manufacture fresh machine part (castings), few other raw materials are to be required to be used.

Please advise if such manufacturing activities can be done under job challan.

[Ganeshan Kalyani]

GST is not applicable on material part as that is covered within the conditon prescribed. However the job work charges is subject to GST.

[Arunachalam siva]

Sir, I want to send a motor to third party for service. what is the provision and documentation i have to follow to fulfill GST compliance. Earlier we were following Cenvat credit rule 4(5a) and two challan(Part-1 filled by sender and part-II filled job worker) issued along with material. original challan copy retained by job worker and material returned to us along with duplicate for transporter challan.