As of today, job work services are liable for 12% GST; units who are actively using it are expected to bring down the cost by about 5%. On the other hand, manufacturers will be able to save on pointless claims. As per the GST Council, job work services refers to processing or treatment undertaken by an individual on commodities which belong to another registered person.
Financial experts are of the opinion that with this move, a hub of units in Indore, which are currently engaged in industrial work and job work services will get a chance to save on tax. Also, this move will facilitate in getting the needed liquidity for expanding and increasing the production.
Previously, 18% of GST was applicable to job work services; however, it was brought down to 12% for several categories of goods about a month ago. Nevertheless, there wasn’t much clarity in the circular, which led to increased tension within the industries.
Sudip Gupta, the Joint Commissioner of the state commercial tax department, mentioned that going forward people who are involved in job work services will need to pay 12% GST versus 18%.
Financial experts also said that there was a lot of confusion concerning applicable GST rates on job work services, which had an adverse effect on business-related activities. Hence, with this clarification, business-related activities will surely get a boost.
GST rate cut will also motivate to open new facilities while also aids in expanding the existing businesses. 12% of GST will be applicable to registered dealers. For unregistered manufacturers, GST will continue to remain at 18%.
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Bhavana is a Senior Content Writer handling the GST vertical. She is committed, professional, and has a flair for writing. When away from work, she enjoys watching movies and playing with her son. One thing she can’t resist is SHOPPING! Her favourite quote is: “Luck is what happens when preparation meets opportunity”.