GST Job Work Compliance — ITC-04, Rule 45 & Challan Tracking

Section 143 of the CGST Act, 2017: job work procedure — principal may send inputs/capital goods to job worker without GST payment; goods must be received back within specified period. Section 19(1): ITC on inputs sent for job work. Section 19(4): inputs not returned within 1 year — ITC must be reversed. Section 19(6): capital goods not returned within 3 years — ITC must be reversed. Rule 45 of the CGST Rules, 2017: mandatory challan in Form GST ITC-04 challan format must accompany every movement of goods to/from a job worker. Form GST ITC-04: periodic return by principal of all goods sent to and received from job workers; AATO > Rs. 5 crore — half-yearly (due 25th of following month); AATO up to Rs. 5 crore — annual (due 25th April). Section 50 of the CGST Act, 2017: interest on ITC reversed where reversal is required due to breach of return deadline.

Job work under GST refers to the processing or working on goods belonging to another registered person (the principal). Under the GST framework, the principal can send inputs, semi-finished goods, or capital goods to a job worker without payment of GST, subject to the conditions under Section 143 of the CGST Act, 2017 and Rule 45 of the CGST Rules, 2017. This provision is critical for industries such as garment manufacturing, auto-components, textile processing, jewellery, pharmaceuticals, and engineering job shops, where value chains involve multiple subcontractors.

Section 19 of the CGST Act, 2017 deals with Input Tax Credit (ITC) on inputs and capital goods sent for job work. Under Section 19(1), the principal is entitled to ITC on inputs sent to a job worker. However, under Section 19(4), if the inputs are not returned from the job worker within one year from the date of being sent, the ITC availed must be reversed with applicable interest under Section 50 of the CGST Act, 2017. For capital goods, the limit is three years under Section 19(6). These deadlines create a critical compliance obligation that must be monitored for each lot of goods sent to each job worker.

Rule 45 of the CGST Rules, 2017 mandates that whenever a principal sends any input, semi-finished goods, or capital goods to a job worker, a challan in the Form GST ITC-04 challan format must accompany the goods. This challan must contain: GSTIN of the principal, name and address of the job worker, description and quantity of goods, HSN code, and value of goods. The challan serves as the primary documentation for the movement of goods and is the basis for the ITC-04 return.

Form GST ITC-04 is the periodic return filed by the principal reflecting all goods sent to and received back from job workers during the period. The CBIC has revised the filing frequency: taxpayers with annual aggregate turnover (AATO) exceeding Rs. 5 crore must file ITC-04 half-yearly (for April-September and October-March periods), due within 25 days of the end of the half-year. Taxpayers with AATO up to Rs. 5 crore must file ITC-04 annually, due by 25th April of the succeeding financial year. The return requires details of goods sent to each job worker (quantity, value, challan number), goods received back from job workers, and goods cleared directly from the job worker's premises. Our service covers the full ITC-04 compliance cycle — challan preparation, goods movement tracking, return filing, and ITC reversal computation if the return deadline is breached.