Summary
Sending material to a job worker does not count as a sale under GST, provided the principal follows the rules: a challan for every dispatch, the goods back within the time limit, and a periodic ITC-04 statement of what went out and what came back. The risk is in the tracking. When a business sends material to dozens of dyers, platers, machinists or stitching units, it loses sight of what is still lying with each one, and goods past their time limit become a taxable supply without anyone noticing. A running balance per job worker, with the due-back date on every line, keeps the credit safe, and lets ITC-04 be produced from the challans already recorded.
01The rules in brief
Sending without tax
Under Section 143 of the CGST Act, a registered principal may send inputs and capital goods to a job worker without paying tax, under intimation, and bring them back after processing. Goods may also be sent directly from the supplier to the job worker.
Credit for the principal
Under Section 19, the principal can take input tax credit on inputs and capital goods sent to a job worker, including goods sent there directly by the supplier.
Time limits
Inputs must come back within one year, and capital goods within three years, of being sent. If they do not, they are treated as supplied by the principal to the job worker on the day they were sent, and tax is payable with interest. These limits do not apply to moulds and dies, jigs and fixtures, or tools. On sufficient cause, the Commissioner may extend them by up to one year for inputs and two years for capital goods.
What a missed limit costs, worked through
Inputs worth ₹10 lakh at 18 percent GST still with a job worker a year after dispatch become a supply on the date they were sent. Tax of ₹1.8 lakh is payable, with interest under Section 50(1) at 18 percent a year from the date it fell due, about ₹32,400 for a full year. The values are illustrative.
Challan
Rule 55 of the CGST Rules requires a delivery challan for goods sent for job work. It carries the challan number and date, the names, addresses and GSTINs of consignor and consignee, the HSN code, description, quantity and taxable value of the goods, the tax rate and tax amount, the place of supply for inter-state movement and a signature, and is issued in three copies.
E-way bill
For inter-state movement of goods to a job worker, an e-way bill is required even when the consignment value is below the usual ₹50,000 threshold, under Rule 138. Within a state, the threshold the state has notified for intra-state movement applies.
Waste and scrap
Waste and scrap generated during job work may be supplied by the job worker directly from its premises if it is registered. Otherwise the principal supplies it, with tax.
Finished goods from the job worker's premises
The principal may supply goods directly from the job worker's premises, if the job worker is registered or the principal declares that premises as an additional place of business.
02ITC-04: what to file and when
ITC-04 is the principal's statement of goods sent to and received from job workers.
| Turnover in the previous financial year | Frequency | Due date |
|---|---|---|
| Above ₹5 crore | Half-yearly | 25 October for April to September; 25 April for October to March |
| Up to ₹5 crore | Yearly | 25 April for the whole financial year |
The form has two parts that matter most in practice:
- Table 4
- goods sent to job workers in the period, with challan number, date, job worker GSTIN or state, item, quantity and taxable value.
- Table 5, in three parts
- 5A, goods received back from the job worker they were sent to; 5B, goods received back from a different job worker, as happens in a chain; 5C, goods supplied from the job worker's premises. Losses and waste are shown in 5A and 5C.
Every line in Table 5 must trace back to a challan in Table 4, in this period or an earlier one. This is where manual registers fail.
03Where tracking breaks down
Partial returns over months
A dyeing unit receives 5,000 metres of grey fabric on one challan and returns it in eleven lots over seven weeks, with some metres lost in processing. Each return has to be set against the right challan, and the balance carried forward. In a spreadsheet, a single mismatched challan number breaks the trail.
Process loss with no record
Some loss is normal in dyeing, plating, machining and stitching. If it is not recorded against the challan with its reason, the principal cannot show where the missing quantity went, and an inspector may treat it as supplied.
Goods past their time limit
A batch of components sent to a plater in October of one year and never fully returned becomes a deemed supply the following October. Unless someone is watching the due-back date on every challan line, the business finds out only at audit.
Several job workers in a chain
Fabric goes from the weaver to the dyer, the printer and the stitching unit. When it comes back from the last unit, the return is reported in Table 5B against the original challan, so each move along the chain must be recorded against that challan.
04A tracking routine that works
- One challan per dispatch,
- created when the goods leave the gate, with the goods type marked as input, capital goods, or moulds, dies, jigs, fixtures and tools.
- A due-back date on every line,
- one year for inputs and three years for capital goods from the challan date, with no date for moulds, dies, jigs, fixtures and tools.
- Every return set against its challan,
- recording quantity returned, quantity used in the finished goods and quantity lost, with the reason.
- A weekly review of open challans,
- with job workers holding material longest called first.
- A monthly list of lines due back within 60 days,
- so the plant can recall material, apply for an extension, or treat it as supplied and pay the tax in time.
- ITC-04 built from the challans,
- never retyped.
05How MatruOS runs it
Challans for every dispatch
In the Production area, material sent to a job worker is recorded on a challan with the job worker, the process, the items, their goods type and the place they leave from. The challan can be printed for the consignment.
Returns, use and loss against each line
Goods coming back are recorded against the challan line, as quantity returned, used or lost, and the balance still with the job worker is shown.
Time limits watched
Each line carries its due-back date, with no limit for moulds, dies, jigs, fixtures and tools. Lines past their date are marked overdue, and the job work screen shows how many challans are open, overdue and due soon.
ITC-04 from the same records
The ITC-04 screen shows Table 4 (goods sent) and Table 5A (goods received back from the same job worker) for the chosen period. Each table downloads as a spreadsheet in the column order of the GST portal's ITC-04 offline tool, ready to copy in. Goods received back from a job worker other than the one they were sent to (5B) and supplies made from the job worker's premises (5C) are added on the portal.
AI can make mistakes. Check every challan and the ITC-04 tables before filing.
Sources
Checked 31 October 2026.
- Central Goods and Services Tax Act, 2017: Sections 19 and 143.
- CGST Rules, 2017: Rule 45 (conditions and ITC-04), Rule 55 (delivery challan), Rule 138 (e-way bill).
- CBIC Notification No. 35/2021-Central Tax: ITC-04 half-yearly for turnover above ₹5 crore and yearly for others.
- CBIC Circular No. 38/12/2018-GST: clarifications on job work.
- GST portal user manual for Form ITC-04: Tables 4, 5A, 5B and 5C.