GST Rate for Job Work

[Guest]

We have a query regarding Latest GST Notification No 22 for Job Work

We are doing Job work of laser cutting of iron Sheets..

a) Sometimes we provide iron ourselves and charge cost of iron (18%) and job work separately on the invoice.

b) sometimes iron is supplied by client and we do job work only and we charge job-work on invoice..

My query is in above case whether GST rate would be 18% or 12%..

[KASTURI SETHI]

It is 12 %. Cutting does not amount to manufacture.

Manufacture - Slitting of HR/CR coils of Iron & Steel sheets not amounts to manufacture

Circular No. 811/8/2005-CX., dated 2-3-2005

Manufacture - Pickling and oiling of metals as preparatory steps not amount to manufacture

Circular No. 927/17/2010-CX., dated 24-6-2010

[KASTURI SETHI]

It is also covered under residual entry (serial no.26) of Notification No.11/17-CT(Rate) dated 28.6.17 as amended vide Notification No. 20/17-CT(Rate) dated 30.9.19 effective from 1.10.19. From both angles, it is 12%.

Also see replies against Issue ID No.115479 dated 1.10.19.

It is expected that Board may issue clarification in this context.

[Ganeshan Kalyani]

The process need to be understood. If out of the process a new product emerges then it is manufacturing process and applicable GST is 18%. And if the process does not amounts to manufacture then the rate is 12%.

[Atul Rathod]

1. Primarily it’s based on manufacturing critiria.

2. Secondary in manufacturing also they have bifurcated between registered person and unregistered person.

3. If Job work is done on goods owned by registered person- 12% (entry-26(i(id)))

4. If job is done on goods owned by unregistered person -18% (entry-26(iv)).

5. If its not amount to manufacturing: than its 18%.

The reason for bifuracation between registered and unregistered person is -terminology used in 26(i(iv)) is job work-which linked to reg person and 26(iv) is for over all linked to unresgitered as well.

AI Summary

GST rate for job work: whether the process is manufacture determines the applicable rate; ownership of goods also influences classification. GST treatment of laser-cutting job work depends on whether the cutting constitutes manufacture; if it does, the higher rate for manufacturing applies, whereas operations treated as non-manufacturing job work fall under the residual notification entry at the lower rate. Practice also distinguishes job work on goods of a registered principal from that on goods of an unregistered principal, which may alter the applicable notification entry and rate.