With the implementation of GST system in India significant structural changes shaped businesses operate and pay taxes. One of the crucial aspects of GST is the Harmonized System of Nomenclature (HSN) code, which provides a standardized classification system for goods and services.
What is Job Work
Definition as per GST Act
Section 2(68) of the CGST Act, 2017 defines job-work as ‘any treatment or process undertaken by a person on goods belonging to another registered person’. The one who does the said job would be termed as ‘job worker’. The ownership of the goods does not transfer to the job-worker but it rests with the principal. The job worker is required to carry out the process specified by the principal on the goods. Hence, job work is outsourced manufacturing services.
It is mainly a process of outsourcing certain processes or services to another business or individual. It can involve a variety of activities, such as manufacturing, processing, assembling, or packaging of goods.
GST Registration for Job Work
The job worker would raise a GST invoice only for the amount of services rendered. Job workers providing more than Rs.20 lakhs of taxable supply in a year (in most States of India,
However, for states -Arunachal Pradesh, Assam, Jammu Kashmir, Ladakh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh, and Uttarakhand threshold limit is 10 lakhs ) are required to obtain GST registration and file GST returns. Since GST registration can also be obtained voluntarily, some manufacturers outsourcing parts of the manufacturing process would mandate the job-worker to obtain GST registration for receiving contracts.
How goods can be sent for job work under GST?
The person registered under GST may send inputs (raw material), capital goods or semi-finished goods to a job worker for doing job work. The person sending material for job work may take these goods out by paying GST or without paying GST also.
Read More: How to Add HSN code in GST Portal?
Time limit clause to bring back processed goods under job work
Here Comes the most important aspect of GST of bringing back the Goods on completion of the job work process, the principal who issued the material for job work may bring back the goods to his place after completion of a job work process. On the other hand, he may directly supply these goods from job worker premises to his end customer including exports.
The goods must be supplied further or should be brought back from job worker premises within 1 year in case of the inputs. In the case of capital goods excluding moulds and dies, jigs and fixtures or tools should be supplied or brought back within three years from the job worker’s premises.
HSN Code/SAC Codes for Job Work Services in Specific Industries
While the HSN code for job work services is 9988, certain industries may have specific HSN codes for their services. Here are some examples:
HSN Code 9987: This code is used for services related to textiles, such as weaving, knitting, stitching, embroidery, and other similar activities.
HSN Code 9987: This code is used for services related to jewellery manufacturing, such as cutting, polishing, setting, and finishing.
HSN Code 9989: This code is used for services related to printing, such as the printing of newspapers, books, journals, and other printed materials.
Also Read: HSN Code in GST: Everything You Need to Know
The Bottom Line
It’s essential for businesses to correctly determine and apply the appropriate HSN code to their products to ensure accurate taxation. The HSN code is typically included in invoices and other relevant documents for GST compliance.
Businesses must be aware of the HSN codes applicable to their products, as these codes determine the tax rates and other regulatory requirements associated with them.
Frequently Asked Questions:
- What does job work mean?
Job work means undertaking any treatment or process by a person on goods belonging to another registered taxable person. The person who is treating or processing the goods belonging to other person is called ‘job worker’ and the person to whom the goods belongs is called ‘principal’.
- What is the GST limit for job work?
Registration requirement for job workers under GST.
A job worker is required to get registered under GST if his aggregate turnover in a financial year exceeds the applicable threshold limit (i.e. Rs 10 lakh in Special Category States or Rs 20 lakh in case of other States)
- Is E-way bill required for job work?
Issuing E-Way Bills in Case of Job Work
The threshold limit of Rs. 50,000 doesn’t apply in this case; hence even if the value of goods sent to the job worker is less than Rs. 50,000, the principal has to generate the e-way bill.
- Whether goods sent by a taxable person to a job worker will be treated as supply and liable to GST? Why?
It will be treated as a supply as supply includes all forms of supply such as sale, transfer, etc. However, the registered taxable person (the principal), under intimation and subject to such conditions as may be prescribed send any inputs and/or capital goods, without payment of tax, to a job worker for job work and from there subsequently to another job worker(s) and shall either bring back such inputs/capital goods after completion of job work or otherwise within 1 year/3years of their being sent out or supply such inputs/capital goods after completion of job work or otherwise within 1 year / 3 years of their being sent out, from the place of business of a job worker on payment of tax within India or with or without payment of tax for export.