GST on Job Work - effect of Notification No- 20/2019- CT (R )


Meaning Of Job Work: As per GST Act Job Work means any treatment or process undertaken by a person on goods belonging to another registered person. The person doing the job work is called job worker; [Sec 2(68)]

So as per above definition, Principal shall be registered person to qualify Job Work under GST.


For example, Car manufacturers (Principals) send out the Seats of Car to smaller factories (job workers) to fix the leather seat cover and other accessories of seat. The job workers send back the complete seats to the car manufacturer.


ITC on job work:

In above given example Car Manufacturer will be allowed to take credit of tax paid on the purchase of goods sent to job worker; provided

A. Goods can be sent to job worker:

  1. From principal’s place of business
  2. Directly from the place of supply of the supplier of such goods

ITC is allowed in both the cases.                                               

B. What will be the effective date*:

  1. Sent from principal’s place of business- Date of goods sent out
  2. Send directly from the place of supply of the supplier of such goods- Date of receipt by job worker

* Will be important to determine the point of taxation if the goods are not returned back within the specified time of 3 year / 1 year explained below.


C. The goods sent for job work by principal manufacturer to job worker must be received back by the principal manufacture within the following time period:

  1. Capital Goods- 3 years
  2. Other than Capital Goods - 1 year

What will happen if goods are not received back within the period mentioned above?  

Such goods will be treated as supply from the effective date and tax will be payable by the principal as a normal transaction.

Below explained changes have been made by CBIC in GST Rate in relation to Job Work vide Notification No.- 20/2019-CT (R)  Dated: 30 Sep 2019. These Changes will be effective from 1st Oct. 2019. Changes are as follows:-

i) For diamond / Jewellery related services:

  • Rate of GST reduced from 5% to 1.5% on supply of job work services in relation to diamonds.


ii) For engineering related services other than bus body building

  • The rate of GST reduced from 18% to 12% on supply of machine job work such as in engineering industry, except supply of job work in relation to bus body building the rate of GST would remain 18%.


W.e.f. 1.10.19, if job-work process amounts to manufacture, rate of tax is 18% and if job-work process does not amount to manufacture, rate of GST is 12%.


If any job-work process changes the character and functioning of any goods, it will amount to manufacture, otherwise not.


GST Rate to be Charged on Job Work in future can be presented as follows:-

Principal  Job Worker   Revised GST Rate
 Registered/Unregistered  Unregistered  NA,  as the GST is not applicable to Unregistered person
 Unregistered  Registered  18%
 Registered  Registered  12%

# above GST rates are not applicable for specified services mentioned GST Tariff Heading 9988 in clause (i), (ia), (ib) and (ic).


So now, Job Workers should charge 12% GST on supplies made to Registered Principals and should charge 18% GST on supplies made to Unregistered Principals.