GST@ 12% ON JOBWORK AGAINST 20/2019- Central Tax (Rate)

[RSundaram RAMASAMY]

Dear All,

We are doing job work activities to aviation customers for the Mfr of Rubber product & Metal Product. Now we charged GST @ 18%. and Using SAC Code 9988 [ (ii) Manufacturing services on physical inputs (goods) owned by others, other than (i) above.]

As per Not.No. 20/2019- Central Tax (Rate), GST rate will be change @ 12%.

Kindly suggest us, can we implement GST @ 12 % for further job work activities for rubber product and metal product ?

Thanks

[mohan sehgal]

Sir,

Thanks for your reply..

However,the CBIC circular no.126/45/2019-GST dt.20th November,2019 has clearly removed the confusion,at least for the present,that the Job Worker Services provided to the Registered persons by a registered dealer shall attract 12% GST (9988);however the residue manufacturing processes carried out on goods belonging to unregistered persons will attract 18% GST;as scope of "Job work"is restircted to only those processes undertaken on goods belonging to another registered person.(9988..Engineering related services other than Bus Body building)

Thus,if any service provided by way of treatment or processing undertaken by a person on goods belonging to another registered person will be considered under the Job Work Service and taxed @12%.

Thanks.

AI Summary

Job work taxation: treatment of goods belonging to registered principals attracts lower GST rate while manufacture-like processes attract higher rate.
Whether a treatment or process on goods belonging to a registered principal is classified as job work or as manufacture determines the applicable GST rate: treatment/process on goods of a registered principal that remains within the scope of job work is treated under SAC 9988 and attracts the lower job-work rate, while operations that result in a new, marketable product amounting to manufacture may be treated as manufacturing service and taxed at a higher rate; Board Circular No. 38/12/2018 permits use of own inputs by job workers and a later CBIC circular is reported to confirm lower treatment for job work on goods of registered persons.