Claiming Input Tax on Job Work

For example: Let’s say A sends a machine to job worker B for paint work on 1 August 2017. If B sends the machine back to A by 1 August 2020 then there will be no tax applicable to B and input tax credit will be available to A.

2. Other goods are sent for job work after the appointed day

All other goods (except capital goods) sent to job worker after GST implementation have to be returned to the manufacturer within a period of 1 year and are not liable to be taxed to the job worker.

For example: X sends plastic glasses to a job worker Y packaging on 15 July 2017. No tax will be applicable to Y if the goods are returned by 15 July 2018, and the input tax credit of the same will be available to X.

3. Goods were sent before the appointed day and are returned after the appointed date

Input tax credit will be allowed on those inputs which are sent for job work but are returned within a period of six months from the appointed date (July 1st). An extension of two months may be granted if there is sufficient cause. A job worker will not be liable to deduct tax on goods in both these cases provided that both the principal and job worker declare their stock on the appointed date.

For example: P had sent goods to a job worker Q on 10 January 2017. Q delivers the goods back to P on 25 November 2017. There will be no tax liability on Q as the goods were sent back within a period of 6 months from appointed date (July 1) and input tax credit on this transaction will be available to P.