GST Rate for Job Work

[Basha AbdulRazack]

Sir,

Please clarify the current rate of GST for following category of job work

9988 Manufacturing services on physical inputs (goods) owned by others

99889 Other manufacturing services

998898 Other manufacturing services n.e.c.

Thanks & Regards

Abdul Razack

[Irudaya Raja]

Sir,

Anyone has aware that the New Circular No.126/45/2019-GST; dated 22nd-November'2019?

Please clarify

Regards,

IrudayaRaja

[Rajendra Prasad]

Dear Sethi Sir,

What is the Rate Applicable on Processing of Shrimp ?

[KASTURI SETHI]

Sh.Rajendra Prasad Ji,

You are an expert. You know each and every thing about GST and always remain updated. After Board's clarification, rate is to be determined on the basis of whether registered or not notwithstanding anomaly is still there. The phrase, 'manufacturing services' must be defined.

As per the present legal position, determine on the basis of 'registered or unregistered'.

[PAWAN KUMAR]

Dear Sir,

Manufacture as per erstwhile law :

the new product should come into existence. If job work is being done on any raw material/input and new manufactured product come into existence, then it will become manufacturing goods, otherwise not. if only any treatment or process undertake on goods belongings to other but the character of goods not changed after carrying out the treatment, it will not become manufacturing goods and is purely manufacture.

as per recent rate reduction and vide the circular no. 126, if job work is related to registered party then it will qualify as job work and become taxable under 12% and if job work is done for other unregistered parties then it will become manufacturing and the gst rate will be 18%. i hope the query is clear now.

[KASTURI SETHI]

After clarification from the Board, I agree with Sh.Pawan Kumar's views in toto. Now inference can be drawn that registration is a must for applicable of lower rate of tax i.e. 12%. Although taxable event is 'supply' under GST, yet the definition of 'manufacture' has not lost it relevance.

It means Govt.wants registration in order to plug the leakage of revenue in the guise of job-work.

[Atul Rathod]

Rightly said by Kasthuri JI. Still relavance of word manufacture does exist.

AI Summary

GST rate for job work: registration-based reduced rate for job-work; processes amounting to manufacture attract higher tax.
GST on job work depends on whether the process amounts to manufacture and on the recipient's registration: processes that change the character or functioning of goods attract the higher manufacturing rate, while processes that do not amount to manufacture fall under a lower residual job-work rate; practitioners must apply the manufacture test to each activity (examples: machining may amount to manufacture; powder-coating typically does not) and apply notification entries and Board circular guidance accordingly.