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GST Input Credit Tutorial 15 – Job Worker and ITC Understanding the concept of the Job-work and the provisions relating to Input tax credit on Job-work.
yah we are in the last section of our
module on input Tax Credit we’ll check
out the provisions specific provisions
relating a job worker principle and job
worker we’ll also look in the input
service distributor we’ll pass through
the distribution rules and understand
the manner and conditions for
distribution of credit let’s start off
with job worker and principal who is a
principal and who’s a job worker a
principal is a registered taxpayer
he definitely has to be registered
because that’s the first condition for
claiming input tax Fred he’s a
registered tax payer who wants to get
his work done by a job worker for which
he’ll send out goods for the job Booker
the job worker would treat process the
goods for the principle there is a
movement of goods the principal will
have a send boost the job worker and on
this goods are the principal cents to
the job worker heat does not pay any tax
before supplying it to the job worker so
this situation is similar to exempt
outward supply remember how we treated
exempt outward supply all the inputs
that go into exam supply there is no
input tax credit available so would
there be input tax credit available for
this situation for the principle well
yes you could treat this as an exception
to the general rule related to exempt
outward supply good send new job worker
input tax credit is available but of
course there’s a condition attached no
input a credit comes without any
condition so there is inputs that the
principal advice from his supplier or
chases he’ll pay some tax on such inputs
in send these inputs to the job worker
without in any tax so we are dealing
with the situation where the principal
can claim input tax credit on the acts
he ate on the purchases
these inputs can be of two types it
could be either inputs the raw materials
that go directly into production or they
could be capital words we’ve seen the
definition of both these earlier
there could be two ways in which the job
worker receives these goods it is sent
from the principal’s place of business
or it could be sent directly in both
these situations input as predators
allowed and the conditions for both
these are the same what are these
conditions the principal should either
received these Goods back from the job
worker or he should have supplied it
sold it from the job workers place of
business as per certain terms and
conditions within a fixed period of time
this is the condition the principal
should have either received the goods
back or he should have sold it from the
job workers premises as per certain
terms and conditions within a stipulated
period of time there is an exception
we’ll check each of these line items the
first that you’ll need to know are the
terms attached for sale directly from
the job workers place of business the
principal can affect the sale and claim
input tax credit on the input if he
declares the job workers place of
business as his additional place of
business unless the job workers
registered or the principal is engaged
in supply of goods which are notified by
the commissioners specifically he’ll
have to send out goods from the job
workers place sell it after paying ask
if he’s selling it within India if he’s
exporting then he can send it out with
or without paying tax these conditions
are very logical they actually fall very
much in line with the three reasons to
be discussed while talking about overall
conditions relating to input tax credit
default within the first reason where
the government should be able to track
should be able to mean an audit trail to
identify the correctness of the claim
if the supplier sells goods from the job
workers place the government would want
to track it if the job workers
registered it is very easy to track but
he he’s not registered then the
government would want to track it
we are principals returns so principal
has to declare this place as the
additional place of business and that
makes it easy for the government to
track so those were third films attach
this sale directly from the job workers
place the second is this depleted period
of time was the timeline for inputs it
is within one year from the date goods
were sent out or received by the job
worker there are two situations for sent
out and received we’ll talk about it in
a bit so capital goods this timeline is
within three years so the principal
should get back his input within one
year get back his capital goods within
three years or make sale within one or
three years respectively remember the
two situations how the job worker gets
goods if these goods are sent from
principals place of business in this
date this one year would be computed
from the date that the goods were sent
out from the place of business if he
gets it directly from the principal
supplier then the date would be one year
or three years from the date the goods
were received by the job worker what is
the exception simple one this is an
exception related to moles and dyes jigs
and fixtures and tools if these are sent
by the principal to the job worker then
there are no conditions attached he can
very well go ahead and claim input tax
credit he need not receive these Goods
back it’s not possible also to receive
these goods back they were where an air
within three years their basic
manufacturing equipments so if all these
conditions are not met at the principle
doesn’t receive goods back or doesn’t
effect
a sale from the job workers place of
business within one year or three year
respectively for input and capital would
then his transfer of goods to the job
worker is deemed as supply deemed as
sales for the principal from the day at
the goods were sent out if he is he
sending out from his promises or from
the date that the goods are received by
the job worker if they are sent out
directly from the supplier so these
would be deemed supply he’s not paid any
tax while transferring these goods to
the job worker so they’ll be treated as
exempt out word supply and as you know
there is no input tax credit available
for exempt out word supply so if the
principle does not meet these conditions
he will have the for feed the input as
credit chain he’ll have to pay it back