GST on job work

How job work is treated

Job work means processing done on goods belonging to someone else. A furniture maker sending plywood to a polishing unit, or a garment unit sending fabric for embroidery, is the principal; the unit doing the work is the job worker. Section 143 of the CGST Act lets the principal send goods out without treating it as a sale, and keeps the principal's input tax credit intact.

Two supplies are involved: the movement of goods (not taxed if the conditions are met) and the job worker's service (taxed).

Step by step

1. Issue a delivery challan for the goods sent, with description, quantity, value and the job worker's details. See delivery challan under GST.
2. Generate an e-way bill where required. Job work movements have specific e-way bill rules, including some inter-state movements below the usual value limit; check the current rule.
3. The job worker processes the goods and returns them on its own challan, with a tax invoice for its charges.
4. The principal claims ITC on the job worker's invoice.
5. File ITC-04 with details of goods sent and received.

Time limits and what happens if missed

Example. On 1 May 2025 a manufacturer sends steel worth ₹2,00,000 (GST rate 18%) to a fabricator. By 30 April 2026 only part has come back, worth ₹1,50,000. The remaining ₹50,000 is treated as supplied on 1 May 2025: GST of ₹9,000 is payable, with interest from the original due date. The department can extend the limits on request, so ask before the year runs out if delays are expected.

The job worker's side

• The job worker registers if its turnover crosses the threshold (see GST registration threshold).
• It charges GST on its processing charges, not on the value of the principal's goods.
• Job work rates depend on the type of processing and the goods; rates were revised in the 2025 rationalisation, so confirm the current rate for your service code.
• Materials the job worker adds from its own stock are part of its charges.

ITC-04 and scrap

ITC-04 is the principal's report of goods sent to and received from job workers. Larger principals (annual aggregate turnover above ₹5 crore) file it half-yearly; others file annually. Due dates and frequency can change, so check gst.gov.in.

Waste and scrap generated at the job worker can be sold by the job worker on payment of tax if it is registered, or by the principal if it is not. Account for the quantity so input and output reconcile.

A simple challan register

A register like this, kept monthly, answers most questions and shows when the time limit is coming up:

Review the open lines every month and follow up any that are more than nine months old.

Common mistakes

• Sending goods on a sales invoice 'to be safe', which creates tax and confuses stock.
• No register of challans out and in, so the one-year limit is missed.
• Job worker charging GST on the full value of goods instead of the processing charge.
• Stock at the job worker not shown in the principal's inventory.

This is general information, not tax advice.

Job work in Tally and Cashflow OS

TallyPrime has job work features using material out and material in vouchers, with the job worker's location set as a godown so stock stays in your books. Cashflow OS syncs your Tally items and godown-wise stock summaries, so you can see on the phone how much material is lying with each job worker. If writing back is switched on, a delivery note or stock journal can be posted from the phone; Tally validates it. ITC-04 is filed on the portal.