ITC-04: the job work return, explained for manufacturers

Who has to file ITC-04

The principal files ITC-04 — the registered manufacturer who sends inputs or capital goods to a job worker under section 143 of the CGST Act without paying tax on the way out. The job worker does not file it.

If you never send goods out for job work, you have nothing to file. If you sent goods in the period, or goods sent earlier came back in it, you file.

When it is due

Since 1 October 2021 the due date depends on your aggregate annual turnover (AATO) in the previous financial year:

ITC-04 used to be quarterly, and many templates and older articles still say so. It has not been quarterly since October 2021.

What goes in each table

The form is mostly two things: what you sent, and what happened to it.

• Table 4 — sent to job workers. One line per challan line: the job worker's GSTIN (or state, if unregistered), challan number and date, description, UQC and quantity, taxable value, and the type of goods — inputs or capital goods.
• Table 5A — received back from the same job worker. The original challan it went out on, the challan or invoice it came back on, and the quantity received, with any loss or waste.
• Table 5B — received back from a different job worker, when goods are passed from one job worker to the next before they return to you.
• Table 5C — supplied straight from the job worker's premises, when you sell the finished goods from there instead of bringing them home first.

Quantities are reported in the unit the material was sent in. If you sent 500 kg of sheet and got back 1,200 brackets, table 5A still speaks in kilograms — which is why the record of how much material each returned piece consumed matters.

The clock behind it: section 143

ITC-04 is the report; section 143 is the rule it reports on. Goods sent out for job work must come back, or be supplied from the job worker's premises, within:

• one year for inputs, and
• three years for capital goods,

counted from the day they were sent out. The Commissioner can extend these by up to one and two years respectively on sufficient cause. Moulds, dies, jigs, fixtures and tools are outside the time limit.

Miss the deadline and the goods are treated as supplied by you to the job worker on the day they were sent out — tax becomes payable as if you had sold them then, with interest. That is why the useful question is not "is ITC-04 filed?" but "what is still lying at a job worker, and since when?"

The records that make it a ten-minute job

1. A delivery challan for every dispatch to a job worker, numbered in one series per financial year (see our guide to Rule 55 challans).
2. Every receipt matched to the challan it settles, with the quantity received, and any waste or loss written down at the time — not reconstructed at filing time.
3. A running balance per challan line: sent = consumed + returned + waste + still out. When that holds for every line, the return writes itself.
4. The date each line went out, so you can see a one-year deadline approaching months before it passes.

Most ITC-04 pain comes from doing step 2 from memory twice a year. Recording the receipt against the challan when the goods arrive is the whole trick.

Common mistakes

• Reporting finished pieces in table 5A when the material went out in kilograms or metres.
• Forgetting goods that went to one job worker and moved on to another — they belong in 5B, not 5A.
• Leaving waste and scrap out, so a line never closes and looks outstanding for ever.
• Treating the return as the deadline that matters, when the section 143 clock on each challan is the one that costs money.