GST on job work is charged on the job charge (labour), not the value of goods, under SAC 9988. After GST 2.0 (22 Sep 2025) the rate is 5% for textile, pharma, leather, printing and food job work; 18% for general/engineering job work (the residual rate rose from 12%); and 1.5% for diamond cutting. The principal sends goods on a delivery challan with no GST and keeps the ITC.
Job Work GST Rates by Sector (SAC 9988)
The GST rate for each common type of job work after the GST 2.0 rationalisation. The rate applies to the processing/labour charge billed by the job worker, not the goods.
| Type of Job Work | GST Rate | SAC | Notes |
|---|---|---|---|
| Textile & apparel (cutting, stitching, dyeing) | 5% | 9988 | Unchanged under GST 2.0 |
| Leather, hides & skins (Ch. 41) | 5% | 9988 | Reduced from 12% (22 Sep 2025) |
| Pharmaceuticals (Ch. 30) | 5% | 9988 | Reduced from 12% (22 Sep 2025) |
| Printing job work (Ch. 48 & 49) | 5% | 9988 | Reduced from 12% (22 Sep 2025) |
| Bricks & umbrella job work | 5% | 9988 | Reduced from 12% (22 Sep 2025) |
| Food, agriculture & grain processing | 5% | 9988 | Many farm processes exempt/5% |
| Jewellery on precious metals | 5% | 9988 | Registered principal |
| Diamond cutting & polishing | 1.5% | 9988 | Special concessional entry |
| Engineering / metal fabrication | 18% | 9988 | Residual — up from 12% |
| Plastic moulding / processing | 18% | 9988 | Residual — up from 12% |
| Chemical processing | 18% | 9988 | Residual — up from 12% |
| IT / software development (outsourced) | 18% | 9983 | Not a 9988 job work |
Rates reflect the GST 2.0 two-slab structure effective 22 September 2025 — the residual job-work rate rose from 12% to 18%, while pharma, leather, printing and bricks moved from 12% to 5%. Confirm the exact entry on the official portal before invoicing.
Before 22 September 2025, general job work not covered by a special entry was taxed at 12%. Under GST 2.0 that residual rate moved to 18%, while notified sectors — pharma, leather, printing, bricks and umbrellas — dropped from 12% to 5%. Re-check the rate on your existing job-work contracts.
How a Principal Sends Goods for Job Work
Under Section 143, a registered principal can send inputs or capital goods to a job worker without paying GST. The movement is covered by a delivery challan, not a tax invoice — the goods stay the property of the principal.
- No GST is payable when the goods are dispatched — only the job worker's service charge is taxed.
- The e-way bill and delivery challan carry the goods; report movement in Form ITC-04.
- Goods can even be dispatched directly from the job worker to a customer if the job worker's place is added as an additional place of business.
The GST is only on the value the job worker adds — the labour/processing charge. On a ₹1,00,000 batch of fabric where stitching costs ₹8,000, GST is charged on the ₹8,000, not the ₹1,08,000. This keeps working-capital blocked in tax low across the supply chain.
Sending goods out for processing? Get your challan, ITC-04 & e-way bill flow set up.
Talk to a GST Expert →Return Time Limits — 1 Year & 3 Years
Goods sent for job work must come back (or be supplied onward) within a set window, or the original dispatch is deemed a supply and the principal must pay GST plus interest from the dispatch date.
| Goods Sent | Return Limit | If Exceeded |
|---|---|---|
| Inputs / raw materials | 1 year | Deemed supply from dispatch date — GST + interest |
| Capital goods (machinery) | 3 years | Deemed supply from dispatch date — GST + interest |
| Moulds, dies, jigs, fixtures, tools | No limit | Can stay with the job worker indefinitely |
The Commissioner may extend the 1-year / 3-year limit by up to one year (inputs) or two years (capital goods) in genuine cases.
How GST Is Charged — Textile vs Engineering
5% Textile job work
18% Engineering job work
In both cases GST is only on the ₹8,000 job charge — the ₹1,00,000 goods belong to the principal and are never re-taxed. The principal claims the ₹400 / ₹1,440 as input tax credit.
Missed a 1-year return deadline? Get the deemed-supply GST & interest sorted.
Get Job Work GST Help →ITC — Principal vs Job Worker
The principal keeps the credit on the goods; the job worker only claims credit on its own inputs. The principal also claims ITC on the job worker's service GST.
Retains full ITC on goods
- ITC on inputs / capital goods sent stays with principal
- Also claims ITC on the job worker's service charge
- Files ITC-04 for goods sent & received
- Liable for deemed supply if limits are breached
ITC only on own inputs
- Claims ITC on own tools, consumables & packing
- No ITC on the principal's goods (not owned)
- Charges GST on the job / labour charge
- Registers if turnover crosses the threshold
Does a Job Worker Need GST Registration?
Registration needed if
- Aggregate turnover crosses ₹20 lakh (₹10 lakh in special-category states)
- You make inter-state job-work supplies
- You want to pass on ITC to the principal cleanly
May stay unregistered if
- Turnover is below the threshold
- All work is intra-state for one principal
- Principal handles compliance under RCM where applicable
Not sure if your job-work unit must register?
Talk to a GST Expert →Job Work GST Compliance Checklist
Whether you are the principal or the job worker, keep this checklist covered so goods, credits and returns all reconcile:
- Delivery challan for every dispatch
- Correct SAC 9988 rate on job charge
- Form ITC-04 (goods sent & returned)
- E-way bill for goods in transit
- 1-year / 3-year return tracking
- GSTR-1 (outward supplies)
- GSTR-3B (monthly/quarterly)
- ITC reconciliation with GSTR-2B
- Job worker premises as additional place (if direct dispatch)
- Books linking goods to each challan
- Extension application before limit lapses
- GSTR-9 annual return
The biggest job-work risk is not the rate — it is the 1-year / 3-year clock. Firms lose lakhs when inputs sit at the job worker past the limit and become a deemed supply with back-dated GST and interest. A simple ITC-04 register that ages every challan prevents it.
Frequently Asked Questions
Related TaxClue services
Sending or Doing Job Work? Get It GST-Compliant
From delivery challans and ITC-04 to the right SAC 9988 rate and the 1-year / 3-year return clock, TaxClue's CA-led team keeps your job-work chain compliant — 100% online, across India.