Valuation of job work

[Nikhil Oltikar]

Circular on clarification of issues on job work dt 26th March 2018.

Point 9.4 sec (iii) allows for the waste and scrap to be supplied by the job worker if the job worker is registered under GST. Often, job working charges are so negotiated with principal because the job worker is allowed to dispose the scrap and retain the proceeds.

In this situation, should the job worker add the value of scrap to the job working charges while invoicing the principal for job work?

If yes, the job worker is already disposing the scrap upon payment of GST. If the value of the scrap is added to job working charges, then will it not be a case where GST is paid twice on the scrap?

[Ganeshan Kalyani]

In my view, when scrap is sold by the job worker then the value of the scrap shall not be added in the value of job work charges.

[Ganeshan Kalyani]

What is the cost of the software?

AI Summary

Valuation of scrap in job work: scrap sold by the job worker should not be added to job-work charges.
Where a registered job worker sells waste or scrap, that sale constitutes a separate supply by the job worker and the value of the scrap should not be added to the job work charges invoiced to the principal, thereby avoiding the risk of GST being applied twice on the same scrap.