GST-for-Job-Work-and-Outsourced-Manufacturing-Services

GST for Job Work and Outsourced Manufacturing Services

GST for Job Work and Outsourced Manufacturing Services

Job work or outsourced manufacturing services are taxable under GST. The GST rate for job work is linked to SAC code or Services Accounting Code, a services classification system developed by the Service Tax Department for levy of service tax. In this article, we look at the job work and outsourced manufacturing services under GST in detail.

GST Definition for Job Work

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 ‘jobworker’. The ownership of the goods does not transfer to the job-worker but it rests with the principal. The jobworker is required to carry out the process specified by the principal on the goods. Hence, job work is outsourced manufacturing services.

Read the Comprehensive Guide on Job Work under GST.

GST Registration for Job Work

Those under taking job work are called jobworker. Under a job work contract, the ownership of the goods does not transfer to the job-worker but it rests with the principal. Hence, the job worker would raise a GST invoice only for the amount of services rendered. Jobworkers providing more than Rs.20 lakhs of taxable supply in a year (in most States of India) 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 jobworker to obtain GST registration for receiving contracts.

SAC Code for Job Work

Job work would be classified in SAC code under the heading manufacturing services on physical inputs (goods) owned by others. The following headings and SAC code are applicable:

Job Work for Food, Beverage and Tobacco Manufacturing

S.No.

SAC Code

Services

1

SAC Code 998811 Meat processing services

2

SAC Code 998812 Fish processing services

3

SAC Code 998813 Fruit and vegetable processing services

4

SAC Code 998814 Vegetable and animal oil and fat manufacturing services

5

SAC Code 998815 Dairy product manufacturing services

6

SAC Code 998816 Other food product manufacturing services

7

SAC Code 998817 Prepared animal feeds manufacturing services

8

SAC Code 998818 Beverage manufacturing services

9

SAC Code 998819 Tobacco manufacturing services

Job Work for Textile, Apparel and Leather Manufacturing

S.No.

SAC Code

Services

1

SAC Code 998821 Textile manufacturing services

2

SAC Code 998822 Wearing apparel manufacturing services

3

SAC Code 998823 Leather and leather product manufacturing services

Job Work for Wood and Paper Manufacturing

S.No.

SAC Code

Services

1

SAC Code 998831 Wood and wood product manufacturing services

2

SAC Code 998832 Paper and paper product manufacturing services

Job Work for Petroleum, Chemical and Pharmaceutical Product Manufacturing

S.No.

SAC Code

Services

1

SAC Code 998841 Coke and refined petroleum product manufacturing services

2

SAC Code 998842 Chemical product manufacturing services

3

SAC Code 998843 Pharmaceutical product manufacturing services

Job Work for Rubber, Plastic and Non-metallic Mineral Product Manufacturing

S.No.

SAC Code

Services

1

SAC Code 998851 Rubber and plastic product manufacturing services

2

SAC Code 998852 Plastic product manufacturing services

3

SAC Code 998853 Other non-metallic mineral product manufacturing services

Job Work for Basic Metal Manufacturing Services

SAC Code 998860 – Basic metal manufacturing services

Job Work for Fabricated Metal Product, Machinery and Equipment Manufacturing

S.No.

SAC Code

Services

1

SAC Code 998871 Structural metal product, tank, reservoir and steam generator manufacturing services

2

SAC Code 998872 Weapon and ammunition manufacturing services

3

SAC Code 998873 Other fabricated metal product manufacturing and metal treatment services

4

SAC Code 998874 Computer, electronic and optical product manufacturing services

5

SAC Code 998875 Electrical equipment manufacturing services

6

SAC Code 998876 General-purpose machinery manufacturing services n.e.c.

7

SAC Code 998877 Special-purpose machinery manufacturing services

Job Work for Transport Equipment Manufacturing

S.No.

SAC Code

Services

1

SAC Code 998881 Motor vehicle and trailer manufacturing services

2

SAC Code 998882 Other transport equipment manufacturing services

Job Work for Other Products Manufacturing

S.No.

SAC Code

Services

1

SAC Code 998891 Furniture manufacturing services

2

SAC Code 998892 Jewellery manufacturing services

3

SAC Code 998893 Imitation jewellery manufacturing services

4

SAC Code 998894 Musical instrument manufacturing services

5

SAC Code 998895 Sports goods manufacturing services

6

SAC Code 998896 Game and toy manufacturing services

7

SAC Code 998897 Medical and dental instrument and supply manufacturing services

8

SAC Code 998898 Other manufacturing services

GST Rate

GST is not applicable for carrying out an intermediate production process as job work in relation to cultivation of plants and
rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products or agricultural produce.

5% GST is applicable for the following types of job work:

  • Printing of newspapers;
  • Textile yarns (other than of man-made fibres) and textile fabrics;
  • Cut and polished diamonds; precious and semi-precious stones; or plain and studded jewellery of gold and other precious metals, falling under Chapter of HSN;
  • Printing of books (including Braille books), journals and periodicals;
  • Processing of hides, skins and leather falling under Chapter 41 of HSN

In case the job work GST rate is not provided explicitly by the GST department, then the default GST rate of 18% would be applicable.

You can find GST rate for all services and file GST return through the LEDGERS GST Accounting Software.

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