GST FORM ITC-04: Navigating GST Compliance for Job Work Transactions

In the manufacturing sector, it is common for businesses to send goods or semi-finished goods to external units or individuals for specific processes or treatments, known as job work. Under the Goods and Services Tax (GST) regime in India, businesses sending goods for job work are required to provide details of these transactions by filing  FORM ITC-04. This comprehensive article will guide you through everything you need to know about FORM ITC-04, explaining its purpose, who is obligated to file it, the applicable due dates, the detailed information required, the online filing process, key aspects of the job work procedure under GST, common errors to avoid, and the importance of timely compliance.

What is GST FORM ITC-04?

FORM ITC-04 is a quarterly statement that must be filed by a registered manufacturer (or any registered person sending goods for job work) detailing the inputs or capital goods dispatched to a job worker or received back from a job worker. It serves as a crucial audit trail of the movement of goods sent out for job work and their subsequent return after the process is completed, or their supply directly from the job worker’s premises. Filing ITC-04 is essential for maintaining compliance and ensuring that the tax authorities are aware of the movement of these goods, which are otherwise treated as supplies. This mechanism under GST allows the principal to send inputs or capital goods to a job worker without payment of tax, provided certain conditions and reporting requirements, including filing ITC-04, are met.

Elaborating on Who Should File FORM ITC-04: The Principal’s Responsibility

Every registered person (referred to as the ‘Principal’) who sends inputs or capital goods for job work is required to file FORM ITC-04. This obligation rests solely with the principal who initiates the movement of goods for job work, regardless of whether the job worker is registered or unregistered under GST.

• Inputs: This refers to any goods used or intended to be used by a supplier in the course or furtherance of business.
• Capital Goods: This refers to goods, the value of which is capitalized in the books of account of the person claiming the input tax credit and which are used or intended to be used in the course or furtherance of business.  

The requirement to file ITC-04 arises in several specific scenarios involving the movement of inputs or capital goods:

• When inputs or capital goods are sent from the principal’s place of business directly to the job worker.
• When inputs or capital goods are sent directly from the supplier’s place of business to the job worker, but on behalf of the principal.
• When inputs or capital goods (after partial or full job work) are sent from one job worker to another job worker for further processing.
• When inputs or capital goods (either in original form or after job work) are received back by the principal from the job worker.
• When inputs or capital goods (after completion of job work) are supplied directly from the job worker’s premises to a customer (on behalf of the principal).

Example:

“Bharat Textiles Ltd.”, a registered textile manufacturer in Gujarat, frequently sends raw fabric (inputs) to various small units for dyeing and printing (job work). Bharat Textiles Ltd. is the principal manufacturer and is required to file FORM ITC-04 every quarter, detailing the quantity and value of fabric sent out to each job worker and the dyed/printed fabric received back. Furthermore, if Bharat Textiles Ltd. instructs its yarn supplier in Maharashtra to directly send yarn (inputs) to a job worker in Rajasthan for weaving, Bharat Textiles Ltd. remains responsible for reporting this movement in ITC-04, even though the goods didn’t pass through their Gujarat premises.

Due Dates for Filing FORM ITC-04

FORM ITC-04 is a quarterly statement and must be filed by the 25th day of the month succeeding the quarter.

Here are the specific due dates for the financial year:

• Quarter 1 (April to June): Due by 25th July
• Quarter 2 (July to September): Due by 25th October
• Quarter 3 (October to December): Due by 25th January
• Quarter 4 (January to March): Due by 25th April

For the current financial year 2024-25, the ITC-04 for the quarter January to March 2025 was due by April 25, 2025. The next ITC-04 for the quarter April to June 2025 will be due by July 25, 2025.

Adhering strictly to these due dates is essential for maintaining compliance and avoiding potential complications related to the movement and accounting of goods sent for job work.

Details to be Furnished in FORM ITC-04: A Detailed Breakdown of Tables

FORM ITC-04 requires detailed information regarding the movement of inputs and capital goods related to job work, which are to be furnished in specific tables:

• Table 4: Details of inputs/capital goods sent for job work: This table captures the outward movement of goods from the principal to the job worker or from a third party (supplier or another job worker) to the job worker on behalf of the principal. It includes critical columns for:
  • GSTIN of the Job Worker: The GST Identification Number of the job worker, if they are registered.
  • Details of Goods Sent:
    • Type of goods (Inputs or Capital Goods)
    • Description of goods
    • Unit Quantity Code (UQC) as per GST standards
    • Quantity of goods sent
    • Taxable Value of the goods (as determined under GST valuation rules)
  • Delivery Challan Details:
    • Unique Delivery Challan number issued by the principal (or third party on principal’s behalf) for dispatching the goods.
    • Delivery Challan date.
  • Original GSTR-1/ITC-04 details (if applicable): If the goods being sent for job work were originally received from a supplier (reported in GSTR-1) or from another job worker (reported in a previous ITC-04), details linking back to that original movement are required.
  • Example: Bharat Textiles Ltd. sent 500 meters of raw fabric (classified as Inputs, UQC: MTR, Value: ₹50,000) via Delivery Challan No. DC/2025-26/101 dated April 10, 2025, to “Quick Dyers” (a registered job worker with GSTIN “…”). This specific detail (Job Worker GSTIN, Goods Type, Description, Quantity, UQC, Value, Challan No., Challan Date) would be entered in a row in Table 4.
• Table 5: Details of inputs/capital goods received back from job worker or supplied from job worker’s premises: This table captures the inward movement of goods back to the principal or their direct supply from the job worker’s location. It includes columns for:
  • GSTIN of the Job Worker: (If registered)
  • Details of Goods Received Back:
    • Type of goods (Inputs/Capital Goods)
    • Description of goods (either original or after job work)
    • UQC
    • Quantity
    • Value
  • Delivery Challan Details (for goods received back):
    • Delivery Challan number (for the return movement)
    • Delivery Challan date.
  • Original Delivery Challan Details (for goods sent): A crucial part of this table is referencing the original Delivery Challan number and date under which the goods were initially sent for job work. This linking allows for tracking the movement and monitoring the time limit.
  • Details of Goods Supplied from Job Worker’s Premises:
    • Tax Invoice number issued by the Principal to the customer (if goods are supplied directly from the job worker’s premises).
    • Tax Invoice date.
    • GSTIN of the recipient (if the direct supply is made to a registered person).
  • Loss or Wastage (if any): Details, including the quantity and value, of any goods lost or wasted during the job work process while in the custody of the job worker.
  • Example 1 (Received Back): Bharat Textiles Ltd. received back 500 meters of dyed fabric (classified as Inputs, UQC: MTR, Value: ₹70,000) from “Quick Dyers” via Delivery Challan No. DC/2025-26/R15 dated May 20, 2025. This entry in Table 5 would reference the original sent challan DC/2025-26/101 dated April 10, 2025.
  • Example 2 (Supplied Directly): If Bharat Textiles Ltd. instructs “Quick Dyers” to directly supply the 500 meters of dyed fabric (valued at ₹70,000) to a customer “Retail Hub” (GSTIN “…”) in Mumbai, Bharat Textiles Ltd. would issue a tax invoice (e.g., Inv/2025-26/505 dated May 22, 2025) to “Retail Hub”. In Table 5, details of the goods supplied, along with the Principal’s tax invoice number and date, and “Retail Hub”‘s GSTIN, would be reported, referencing the original sent challan DC/2025-26/101 dated April 10, 2025.

How to File FORM ITC-04 Online: Step-by-Step Guide

FORM ITC-04 must be filed electronically through the GST portal. You have the flexibility to prepare online by entering data directly into the form or use an offline utility for bulk data uploads, which is often easier for businesses with numerous job work transactions.

1. Visit the GST Portal: Go to the official GST portal: www.gst.gov.in.
2. Login: Enter your valid username and password.
3. Go to Returns Dashboard: Navigate to Services > Returns > Returns Dashboard.
4. Select Financial Year and Return Filing Period: Choose the relevant Financial Year and the specific quarter for which you are filing the statement. Click Search.
5. Access ITC-04: Under the FORM ITC-04 (Details of goods/capital goods sent to job worker) section, you will see options to Prepare Online or Download Offline Utility.
6. Data Entry Method:
   • Prepare Online: Click this if you have a limited number of entries. Manually enter the details for goods sent (Table 4) and goods received back or supplied from job worker’s premises (Table 5) directly into the online form.
   • Download Offline Utility: Click this to download an Excel-based utility for bulk data entry. Open the utility and carefully fill in the details for Table 4 and Table 5 as required in the template sheets. Ensure all mandatory fields are completed and data is accurate.
7. Generate JSON (Offline Utility Users): Within the offline utility, use the validation features to check for errors in your data. Once validated, use the option to ‘Generate JSON File to Upload’.
8. Upload JSON (Offline Utility Users): Go back to the ITC-04 section on the GST portal and click on the ‘Upload’ button. Select and upload the JSON file generated from the offline utility.
9. Review and Validate (Online & Offline): After online entry or offline upload, the portal will process the data and display it. Carefully review the uploaded details. The portal provides online validation tools to check for inconsistencies or format errors. Correct any errors flagged by the system.
10. Generate Summary: Once you have entered/uploaded and validated the data, click on the ‘Generate Summary’ button. The portal will generate a summary of the information provided in Table 4 and Table 5. Review this summary carefully to ensure it reflects your transactions accurately.
11. File the Statement: After reviewing the summary and confirming its accuracy, check the declaration box and click on the File Statement button.
12. Submit with DSC or EVC: Authenticate the filing using a Digital Signature Certificate (DSC) (mandatory for companies and Limited Liability Partnerships – LLPs) or Electronic Verification Code (EVC) (generated via OTP sent to your registered mobile number and email ID for other types of taxpayers).

Key Aspects of Job Work under GST

Understanding these key aspects of job work under GST is fundamental for accurate ITC-04 filing and overall compliance:

• Movement under Delivery Challan: Goods sent for job work, whether from the principal’s premises or directly from the supplier/another job worker, must be sent under the cover of a Delivery Challan issued by the principal (or the person sending the goods on behalf of the principal), as prescribed under Rule 55 of the CGST Rules, 2017. The challan must contain specific details including:
  • Name, address, and GSTIN of the consignor (Principal).
  • Name, address, and GSTIN (if applicable) of the consignee (Job Worker).
  • Delivery Challan number and date.
  • HSN code and description of goods.
  • Quantity of goods.
  • Taxable value of goods.
  • GST rate and tax amount (Note: Tax is not charged on the challan itself, but the value and tax rate of the underlying goods are required for record-keeping).
  • Place of supply (if different from the location of the job worker).
  • Signature of the consignor. Crucially, a tax invoice is not issued when sending goods for job work, as it is not considered a supply at that stage.
• Time Limits for Return/Supply: This is a critical condition for availing the benefit of sending goods for job work without immediate payment of tax. The inputs or capital goods sent for job work must be received back by the principal or supplied directly from the job worker’s premises within specific time limits from the date of sending:
  • Inputs: Must be received back or supplied within one year from the date of sending out.
  • Capital Goods: Must be received back or supplied within three years from the date of sending out. The starting point for calculating this time limit is the date of the Delivery Challan under which the goods were initially sent out by the principal. If the goods (or goods after job work) are not received back by the principal or supplied directly from the job worker’s premises within these prescribed time limits, it is deemed that the goods were supplied by the principal to the job worker on the date they were originally sent out. This deemed supply attracts GST liability for the principal, and tax along with interest would be payable from the date the goods were initially sent out.
• Input Tax Credit (ITC) on Inputs/Capital Goods sent for Job Work: A significant benefit under the job work provisions is that the principal is allowed to take Input Tax Credit (ITC) on the inputs or capital goods even if they are sent directly from the supplier’s place of business to the job worker’s premises without first being received at the principal’s place of business. This is subject to the principal receiving the goods back within the prescribed time limits (or them being supplied directly from the job worker’s premises) and the principal fulfilling the reporting requirements, including filing FORM ITC-04. This provision helps in maintaining the seamless flow of ITC for manufacturers utilizing job work.

Procedure When Goods are Sent from One Job Worker to Another

Under the GST job work provisions, it is permissible to send goods from one job worker to another job worker for further processing or completion of job work. In such cases, the goods must be sent under the cover of a Delivery Challan. This challan must be issued either:

1. By the Principal, if the goods are sent directly from the first job worker’s premises to the second job worker.
2. By the first Job Worker, on the instruction of the Principal, if the goods are sent from the first job worker’s premises to the second job worker. The challan issued by the first job worker must also contain the details of the principal.

In both scenarios, the Principal remains responsible for tracking the movement of goods and accurately reporting this transaction in their FORM ITC-04 (in Table 4, showing goods sent from the principal to the second job worker, referencing the original challan). The details in ITC-04 should clearly indicate the movement from the first job worker to the second job worker, referencing the original Delivery Challan under which the goods were initially sent out by the principal. The crucial time limit (one year for inputs, three years for capital goods) for the goods to be returned to the principal or supplied from the second job worker’s premises will be counted from the date the goods were originally sent out by the principal to the first job worker.

Procedure When Goods are Supplied Directly from Job Worker’s Premises

Under certain conditions, the principal can instruct the job worker to supply the goods (after completion of job work) directly from the job worker’s premises to the customer. This is allowed without the goods first being returned to the principal’s place of business, provided one of the following conditions is met:

1. The principal declares the job worker’s premises as their additional place of business.
2. The job worker is registered under GST. (This condition is generally sufficient now).

In this case, the principal will issue a tax invoice to the customer for the supply. The movement of goods from the job worker’s premises to the customer will be under the cover of a Delivery Challan. This challan is typically issued by the job worker (if registered) or by the principal (if the job worker is unregistered and the principal has declared the job worker’s premises as an additional place of business). The principal must accurately report this direct supply in FORM ITC-04 (in Table 5), providing details of the principal’s tax invoice issued to the customer (number, date, GSTIN of recipient if registered) and referencing the original delivery challan under which the goods were sent for job work.

Reconciliation with Other GST Returns and Records

While FORM ITC-04 is a statement primarily for tracking goods movement for job work, the information reported in it needs to reconcile with other aspects of your GST compliance and internal records:

• GSTR-3B: The Input Tax Credit (ITC) claimed on the inputs/capital goods sent for job work should align with the ITC reported in GSTR-3B. In the unfortunate event of a deemed supply occurring due to exceeding the time limit, the GST liability arising from this deemed supply needs to be discharged and reported under the appropriate tables in GSTR-3B (as an outward supply).
• GSTR-1: If goods after job work are supplied directly from the job worker’s premises, the principal will issue a tax invoice for this outward supply and report it in their GSTR-1 return. Similarly, if a deemed supply occurs due to exceeding the time limit, the principal needs to treat this as an outward supply and report it in GSTR-1.
• Electronic Way Bills (E-Way Bills): Movement of goods for job work often requires the generation of E-Way Bills. The details in the Delivery Challan and ITC-04 should align with the E-Way Bill details.
• Internal Stock Records and Accounting System: The quantity and value of goods sent for and received back from job work, as reported in ITC-04, must meticulously reconcile with your internal stock records and accounting system. This is crucial for inventory management and during audits.

Common Mistakes to Avoid While Filing FORM ITC-04

Filing FORM ITC-04 accurately requires careful record-keeping and attention to detail. Here are some common mistakes to avoid that can lead to issues:

• Missing the Due Date: Filing late for FORM ITC-04 can attract unwanted attention and scrutiny from tax authorities, even though there isn’t a specific late fee defined in the same way as for GSTR-3B or CMP-08. Non-filing is a compliance lapse.
• Incorrect or Missing Delivery Challan Details: Ensure every movement of goods for job work is covered by a proper Delivery Challan and that the details (number, date) are accurately reported and linked in ITC-04.
• Not Tracking Time Limits Diligently: Failing to monitor the one-year/three-year time limit for the return or direct supply of goods is a major risk. Exceeding the limit triggers a deemed supply with tax, interest, and potential penalties. Implement a robust system to track goods sent for job work.
• Incorrectly Reporting Inter-Job Worker Movement: When goods move from one job worker to another, ensure the reporting in ITC-04 correctly reflects this flow and links back to the original challan from the principal.
• Not Reporting Direct Supplies from Job Worker: If goods are supplied directly from the job worker’s premises, ensure this transaction is accurately reported in Table 5 of ITC-04, referencing the principal’s tax invoice.
• Errors in Quantity or Value: Double-check the quantity, UQC, and value of goods reported in both Table 4 (sent) and Table 5 (received back/supplied). Inconsistencies can raise red flags.
• Not Filing Even If No New Movement: While ITC-04 reports movement during the quarter, not filing for a quarter at all can be seen as a compliance lapse if you have goods outstanding at a job worker’s premises. Though the form structure focuses on the current quarter’s activity, continuous filing is best practice if job work processes are ongoing.

Consequences of Not Filing FORM ITC-04

Failure to file FORM ITC-04 within the stipulated due date, or filing it incorrectly or incompletely, can lead to several serious consequences:

• Audit and Scrutiny: Non-compliance with ITC-04 filing requirements significantly increases the likelihood of your business being selected for GST audit or detailed scrutiny by the tax authorities.
• Demand of Tax on Deemed Supply: The most critical consequence is the risk of the tax authorities treating goods not accounted for or not returned/supplied within the prescribed time limits as a deemed supply from the principal to the job worker. This triggers a demand for GST on the value of those goods as of the date they were originally sent out for job work, along with applicable interest and penalties.
• Disruption of Input Tax Credit (ITC): While ITC-04 itself doesn’t involve tax payment, non-compliance with the job work procedures and accurate filing can potentially impact the principal’s eligibility to take Input Tax Credit (ITC) on the inputs/capital goods initially sent for job work, especially if the time limits are exceeded.
• Difficulty in Reconciliation: Lack of proper ITC-04 filings makes it exceedingly difficult to reconcile the physical movement and stock position of goods with your internal inventory records, accounting software, and other GST returns (like GSTR-3B and GSTR-1). This can cause significant issues during audits.

Key Takeaways

• FORM ITC-04 is a mandatory quarterly statement for registered persons (Principals) sending inputs or capital goods for job work under GST.
• It provides crucial details of goods sent to and received back from job workers, or supplied directly from their premises.
• The due date for filing is the 25th day of the month succeeding the quarter.
• Movement of goods for job work must always be under the cover of a Delivery Challan.
• Strict time limits (1 year for inputs, 3 years for capital goods from the date of original dispatch) apply for goods to be returned or supplied from the job worker’s premises to avoid deemed supply.
• Failure to adhere to time limits results in deemed supply, attracting GST liability, interest, and penalty.
• Filing is done online through the GST portal, with options for online entry or offline utility.
• The principal can take Input Tax Credit (ITC) on goods sent for job work, even if sent directly from the supplier, subject to job work compliance.
• Specific procedures exist for sending goods from one job worker to another and for direct supply from the job worker’s premises, all requiring reporting in ITC-04.
• Timely and accurate filing of ITC-04 is crucial for compliance, maintaining a robust audit trail, accurate stock accounting, seamless ITC flow, and avoiding penalties or demand on deemed supply.

Understanding the intricate requirements and procedures for job work and diligently filing FORM ITC-04 is absolutely essential for manufacturers and businesses utilizing job work facilities under the GST regime. By ensuring timely and accurate submission, businesses can maintain compliance, properly account for their goods, avoid significant legal and financial repercussions, and ensure the smooth flow of their manufacturing operations and the associated Input Tax Credit. Always refer to the latest updates and notifications from the GST department regarding job work provisions and ITC-04 filing.