Section 19 of The Central Goods and Services Tax Act, 2017
- (1)The principal shall, subject to such conditions and restrictions as may be prescribed, be allowed input tax credit on inputs sent to a job worker for job work.
- (2)Notwithstanding anything contained in clause (b) of sub-section (2) of section 16, the principal shall be entitled to take credit of input tax on inputs even if the inputs are directly sent to a job worker for job work without being first brought to his place of business.
- (3)Where the inputs sent for job work are not received back by the principal after completion of job work or otherwise or are not supplied from the place of business of the job worker in accordance with clause (a) or clause (b) of sub-section (1) of section 143 within one year of being sent out, it shall be deemed that such inputs had been supplied by the principal to the job worker on the day when the said inputs were sent out: Provided that where the inputs are sent directly to a job worker, the period of one year shall be counted from the date of receipt of inputs by the job worker.
- (4)The principal shall, subject to such conditions and restrictions as may be prescribed, be allowed input tax credit on capital goods sent to a job worker for job work.
- (5)Notwithstanding anything contained in clause (b) of sub-section (2) of section 16, the principal shall be entitled to take credit of input tax on capital goods even if the capital goods are directly sent to a job worker for job work without being first brought to his place of business.
- (6)Where the capital goods sent for job work are not received back by the principal within a period of three years of being sent out, it shall be deemed that such capital goods had been supplied by the principal to the job worker on the day when the said capital goods were sent out: Provided that where the capital goods are sent directly to a job worker, the period of three years shall be counted from the date of receipt of capital goods by the job worker.
- (7)Nothing contained in sub-section (3) or sub-section (6) shall apply to moulds and dies, jigs and fixtures, or tools sent out to a job worker for job work. Explanation.--- For the purpose of this section, "principal" means the person referred to in section 143.
Summary
- Section 19 of the Central Goods and Services Tax Act allows a main business owner, called a principal, to claim tax credits on materials sent to a job worker for processing.
- The principal can claim this credit even if the raw materials or machines are shipped straight to the job worker's site without entering the principal's own premises.
- Any raw materials sent to a job worker must be returned to the principal or sold directly from the job worker's location within one year.
- Capital goods, like large machinery sent for job work, must be returned or handled within three years.
- If materials or machines are not returned within these deadlines, the law treats them as if the principal officially sold them to the job worker on the day they were first sent out.
- The time limits for returning goods do not apply to specific factory tools like moulds, dies, jigs, and fixtures.
Practical examples
FAQ
1. What is the time limit for returning inputs from a job worker under Section 19 of The Central Goods and Services Tax Act, 2017?
Section 19 of The Central Goods and Services Tax Act, 2017 requires inputs sent for job work to be returned to the principal within one year of being sent out.
2. Can I claim credit if goods go directly to a job worker according to Section 19 of the CGST Act?
Yes. Section 19 of the CGST Act specifically allows the principal to take tax credit on inputs and capital goods even if they are delivered directly to the job worker's location.
3. What happens if a job worker does not return machinery within three years under Section 19 of the tax law?
Under Section 19 of the tax law, if capital goods are not returned within three years, it is legally deemed that the principal supplied the goods to the job worker on the date they were originally sent out.
Test yourself
Q1.Under Section 19 of The Central Goods and Services Tax Act, 2017, what is the required timeframe for capital goods (other than moulds and dies) to be returned from a job worker?
Q2.According to Section 19 of The Central Goods and Services Tax Act, 2017, which items are exempt from the time limit rules requiring return from a job worker?
Q3.If inputs are sent directly to a job worker, how does Section 19 of The Central Goods and Services Tax Act, 2017 calculate the one-year return period?
Q4.How does Section 19 provide an exception to the strict possession rules of Section 16 of The Central Goods and Services Tax Act, 2017?