Job Work under GST: Additional Points
Job Work under GST: Additional Points
Having explained you about the basics of Job Work under GST, there are some additional points that are worth knowing in respect of Job Work. Feeling anxious, are you? Well we’ve got the remedy to your anxiety.. Read on.
When a principal sends inputs to a job worker, there are high chances of production of scrap or waste material while the job work is in process.
Sometimes, the scrap that is generated or the waste product is produced during the process, is sellable.
If that is the case, any sane person would sell the same to make some extra money.
After all, who doesn’t like extra cash?
Even the government knew this, and they also knew how people could misuse this.. so what they did.. they made a rule.
A rule which says that If you sell scrap or waste which is generated during job work process, you will have to pay that tax on such supply if such scrap or waste is taxable.
As per section 143(5) of CGST Act, any waste and scrap generated during the job work may be supplied on payment of tax by the:
a. Job worker from his place of business, if he is registered, or
b. Principal if the Job worker is not registered.
If scrap or waste is being sold, GST on such supply would be made by the job worker, if he is registered under GST and if he is not registered, then GST would be paid by the principal.
Further as per section 15 of CGST Act, 2017 the value of supply shall be transaction value where price is the sole consideration and parties are not related.
Section 19 of the CGST Act, 2017 provides that the principal shall be entitled to take the credit of input tax paid on inputs sent to the job-worker for the job-work.
The proviso also provides that the principal can take the credit even when the goods have been directly supplied to the job-worker without being brought into the premise of the principal.
This proviso is beneficial in many aspects since principal can claim ITC directly on buying the inputs. He need not waste the time by first bringing inputs to his place of business, claiming ITC and then sending the inputs to job worker.
If inputs were sent to job worker prior to the introduction of GST, and will be received back by the principal within 6 months from 1st of July, then no tax would be payable.
However, if such inputs are not received back by the principal, then the ITC claimed shall be reversed, or paid back to the government by the principal.
To give effect to this rule, the principal and job worker are required to provide details of such goods/inputs sent/received for job-work in FORM TRAN-1.
