Tax Liability under Current Regime

In case, if the process undertaken by the job worker amounts to manufacture/ deemed manufacture, the job worker is liable to pay excise on the final product. However, the principal manufacturer who has supplied the goods for job work may furnish a declaration which exempts goods manufactured by a job worker from paying this duty. This declaration also puts certain conditions on the principal manufacturer which are:

1. the goods produced by the job worker must be used in the manufacturing process by the principal manufacturer, and

2. The manufacturing process should result in a dutiable product on which the government can charge excise duty.

The activity undertaken by job worker is not liable for service tax as well because the process amounting to manufacture or production of goods is covered by the Negative list of Services Tax.