Clarification on Job Work Services Under GST – Circular No. 126/45/2019
<p>Circular No. 126/45/2019 clarifies the scope of job work services under the Goods and Services Tax (GST) regime, particularly in light of changes made by Notification No. 11/2017-Central Tax (Rate). This notification, effective from October 1, 2019, reduced the GST rate on job work services from 18% to 12%, addressing key questions regarding its application.</p><p><strong>Key Highlights:</strong></p><ul><li><strong>Reduced GST Rate on Job Work</strong>: The notification introduced a 12% GST rate for job work services, which was previously taxed at 18%. This change applies to all job work services, except for specific exclusions mentioned under the notification.</li><li><strong>Differentiating Job Work from Manufacturing Services</strong>: The clarification emphasizes the distinction between two different types of services under GST. Item (id) covers job work services as defined under the CGST Act—services where treatment or processing is done on goods owned by another registered person. On the other hand, item (iv) deals with manufacturing services on physical inputs owned by others, but excludes services covered under item (id).</li><li><strong>Scope of Job Work</strong>: The job work definition is clarified further, with the focus on services that involve treatment or processing of goods that belong to another registered person. This is essential for understanding the taxability of various job work-related services under GST.</li><li><strong>Elimination of Redundancy</strong>: The entry for "manufacturing services on physical inputs owned by others" under item (iv), which previously attracted an 18% GST rate, is now considered redundant for services falling under job work. This reduces confusion and aligns the GST treatment for job work services more effectively.</li></ul><p>This clarification streamlines the GST treatment for job work services and ensures better understanding and implementation across businesses and tax authorities.</p><p><a href="https://cms.plasament.com/storage/chirag-singla/circular-cgst-126.pdf">circular-cgst-126</a><br> </p>