Gst rates on job work services
The Central Board of Indirect Taxes and Customs (CBIC) issued Circular No. 126/45/2019-GST on November 22, 2019, to clarify the scope of GST rates on job work services. This circular addresses concerns about the redundancy of certain GST rate entries in Notification No. 11/2017-Central Tax (Rate) dated June 28, 2017, following the reduction of the GST rate on all job work services from 18% to 12% effective October 1, 2019.
Key Points from the Circular:
- Clarification on GST Rates for Job Work Services:
- Entry (id) under heading 9988 of the Services Rate Notification specifies a 12% GST rate for “Services by way of job work other than (i), (ia), (ib), and (ic) above.”
- Entry (iv) under the same heading specifies an 18% GST rate for “Manufacturing services on physical inputs (goods) owned by others, other than (i), (ia), (ib), (ic), (id), (ii), (iia), and (iii) above.”
- Demarcation Between Entries (id) and (iv):
- Entry (id) applies exclusively to job work services as defined in Section 2(68) of the CGST Act, 2017, which are services by way of treatment or processing undertaken by a person on goods belonging to another registered person.
- Entry (iv) pertains to manufacturing services on physical inputs owned by persons other than those registered under the CGST Act, thereby excluding the services covered under entry (id).
This clarification ensures that the GST rates are applied correctly based on the nature of the services and the ownership status of the goods involved.
