What it means
A manufacturer often sends material out for plating, polishing, machining or packing. Under section 143 the principal can send inputs and capital goods to a registered or unregistered job worker on a delivery challan, without paying GST, as long as:
- inputs come back within 1 year, and capital goods within 3 years (moulds and dies, jigs and fixtures, and tools are exempt from this limit);
- the principal reports the movement in form ITC-04, half-yearly if AATO is above ₹5 crore and yearly otherwise (since October 2021).
If goods do not come back in time, the principal is treated as having supplied them on the day they were sent, and owes tax with interest.
Example
Kaveri Agencies sends 500 brass blanks worth ₹2,40,000 to a polisher in Hosur on 4 Nov 2026. 480 come back polished on 20 Nov; the polisher’s bill is ₹24,000 + 18% GST. The 20 lost in process are recorded as waste. The movement goes in Kaveri’s ITC-04.
Common mistakes
- Sending goods without a challan or e-way bill.
- Losing track of material at the job worker until the one-year limit has passed.
- Not recording waste and scrap, so stock never reconciles.
In MyRecords
Subcontracting orders send material to job workers with a rule 55 delivery challan, track what is still with each job worker, receive the finished goods at the right cost, and record the job worker’s bill. A daily alert names inputs held for 300 days. The Job-work registers give the ITC-04 tables (table 4 sent, table 5A received back), and Customer job work orders handle work you do on a customer’s material.