Before understand about ITC-04, Need first know about "Job work" and "Principal".


What is job work?

Job work means processing or working on raw materials or semi-finished goods supplied by the principal manufacturer to the job worker. This is to complete a part or whole of the process which results in the manufacture or finishing of an article or any other essential operation.

For example, big shoe manufacturers (principal) send out the half-made shoes (upper part) to smaller manufacturers (job worker) to fit in the soles. The job workers send back the shoes to the principal manufacturer.

As per GST Act, job work means any treatment or process undertaken by a person on goods belonging to another registered person. The person doing the job work is called job worker .


Who is Principal?

The Person/ Firm/ Company etc. who bought goods and sent it to the job worker for job work for a specific period of time, are called principal under Job work under GST.


Form ITC 04 :-


Who should file : This form must be submitted by the registered person, If he sent goods to the job worker for job work.


Due date : 25th of the next month of the quarter. 

Example - July to September quarter due date is 25th  october.


Details which will give in this form :- 

1st Details of input or capital goods sent to the job worker.

2nd Details of input or capital goods received back form the job worker.


Penalty on late filing of ITC-04 :-

-As of now, there is no penalty, late fee or interest for late filing of Form ITC-04.


Why Introduce the Form ITC 04 ?

So that, Govt. can know about that which goods are sending to the job worker or other entity, it's really sending for job work purpose or not.

That's why, Govt. have set the time limit for goods received back by the principal from the job worker, otherwise it will consider in deemed supply and need to pay tax liability.  


ITC will be allowed to principal in both the cases :-

1st Case : Goods purchased and sent to the job worker from principal's place of business. 

                  Effective date - Date of goods sent out.

2nd Case : Goods purchased and sent to the job worker directly from the principal sellers without going to the principal first.

                  Effective date - Date of receipt of goods by the job worker


Note : Effective date is important because it will help to determine the point of taxation if the goods are not returned back within the specified time.


Time limit for goods received back by the principal :-

1st in case of capital goods - 3 years from effective date.

2nd in case of input goods - 1 year from effective date.


Note : In case goods are not received back within the period mentioned above, such goods will be treated as supply from the effective date and tax will be payable by the principal. The challan issued will be treated as an invoice for such supply.