Background:
Earlier, CBIC had issued Notification No.11/2017- Central Tax (Rate), dated June 28, 2017 (“Services Rate Notification”) w.r.t. the rates for supply of various services under Central Goods and Services Act, 2017 (“CGST Act”).
Further, CBIC vide Circular No. 126/45/2019 – GST dated November 22, 2019 clarified as under:
- There is a clear demarcation between the scope of the entries at serial no. 26(id) & serial no. 26(iv) under heading 9988 of the Services Rate Notification.
- Entry at serial no. 26 (id) covers only job work services as defined in Section 2(68) of CGST Act, 2017 i.e. services by way of treatment or processing undertaken by a person on goods belonging to another registered person.
- On the other hand, the entry at serial no 26(iv) specifically excludes the services covered by entry at item (id), and therefore, covers only such services which are carried out on physical inputs (goods) which are owned by persons other than those registered under the CGST Act.
To know more, kindly watch our old video on “When 12% GST RATES Applicable on Job Work – Manufacturing Services” by CA Bimal Jain at: https://www.youtube.com/watch?v=Qt4XoMDv0fA
Following Notification has been issued amending Services Rate Notification:
Notification:
Now, the CBIC vide Notification No. 15/2021-Central Tax (Rate) dated November 18, 2021, has further amended the Services Rate Notification, in a following manner:
- In S. No. 26 of the Services Rate Notification, related to ‘manufacturing services on physical inputs (goods) owned by others’, in item (i), in clause (b) regarding the services by way of job work in relation to textiles and textile products, after the words, “Customs Tariff Act, 1975 (51 of 1975)” the words “except services by way of dyeing or printing of the said textile and textile products” has been inserted.
Thus, Job work services w.r.t. dyeing or printing of textile and textile products falling under Chapter 50 to 63 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975) provided to registered persons shall be taxable @ 12% and to unregistered persons shall be taxable @ 18% as the scope of ‘job work’ is restricted to only those processes undertaken on goods belonging to another registered person.
The Notification will come into force with effect from January 1, 2022.
Similar notifications have been passed under Integrated Goods and Services Tax Act, 2017 (“IGST Act”) and Union Territory Goods and Services Tax Act, 2017 (“UTGST Act”).
CGST (Rate) Notification: http://www.a2ztaxcorp.com/wp-content/uploads/2021/11/Notification-15-2021-CGST.pdf
IGST (Rate) Notification: http://www.a2ztaxcorp.com/wp-content/uploads/2021/11/Notification-15-2021-IGST.pdf
UTGST (Rate) Notification: http://www.a2ztaxcorp.com/wp-content/uploads/2021/11/Notification-15-2021-UTGST.pdf
Relevant provision:
Relevant portion of Services Rate Notification:
|
S. No. |
Heading | Description of Service | Rate |
Condition |
|
26 |
Heading 9988
(Manufacturing services on physical inputs (goods) owned by others) |
(i) Services by way of job work in relation to- (b) Textiles and textile products falling under Chapter 50 to 63 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975); except services by way of dyeing or printing of the said textile and textile products |
2.5
|
– |
|
id) Services by way of job work other than (i), (ia), (ib), (ic) and (ica) above |
6 | – | ||
|
(iv) Manufacturing services on physical inputs (goods) owned by others, other than (i), (ia), (ib), (ic), (ica), (id), (ii), (iia) and (iii) above. |
9 |
– |
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