Composition scheme for job worker

Composition scheme for job worker

Dear All,

I am a TShirt manufacturer registered under GST, used to send the fabrics to Job worker for stitching. His jobwork bill will be about 20 lakhs per year, Now I like to get him registered under GST with composition scheme. Here are my queries,

1. Can that stitching jobworker opt for Composition scheme?
2. If so, he needs to pay 2% gst right?The GST amount he needs to collect from me or he has to pay his own?If i have to pay that tax, then can i Claim it?
3. In Textiles, there is a confusion that what will be the GST, 5% or 18%..Some CA Professional says for the jobworks happening between Yarn to fabric, it ll be 5% and 18% on the jobworks done on the fabric including stitching and printing, etc...Is that Correct?

Thanks in advance.

Asked 8 years ago in GST

Hii...

1. No Job worker cant take registration under Composition scheme coz its not available for Service Sector other than

otels / restorents

2. under Composition seller cant charge tax from buyer , tax component includes in selling price , thus no question on ITC raise.

3. rates are still confusing , but as per recent notifications yarn of 18% used in fabric of 5 % then no refund allowed .

in your case as per me

job worker have to charge GST on his service @ 18% and you can got ITC of the same ,if Job Worker is Un Reg then you have to pay under reverse charge and right to got ITC

hope your queries resolve now

Lalit Bansal

CA, Delhi

776 Answers

61 Consultations

Talk to Lalit Bansal

Hi,

    I could not understand your answer 1.  He is a garments jobworker, he doesn't fall under service category, how cant he opt for composition scheme?

Asked 8 years ago

stiching work is service in this they also use some consumables I e buttons ,Bukram etc

In gst service providers can't opt composition scheme

That's why I said no composition allowed

For more details plz book a telephonic consultation

Lalit Bansal

CA, Delhi

776 Answers

61 Consultations

Talk to Lalit Bansal

Hello Sir,

Composition Scheme is only for people selling goods and not for people supplying a service. Hence the job worker cannot be registered under GST.

Trust this clarifies your query.

Feel free to call / get back in case of further clarifications.

Thanking You.

Regards,

Rohit R Sharma

BCOM, ACA, LLB-GEN, CERT. FAFP

Rohit R Sharma

CA, Mumbai

2104 Answers

95 Consultations

Talk to Rohit R Sharma

Hi,

Composition scheme is applicable to only to sale of goods and not to service providers.

Regards,

Keerthiga Padmanabhan

M.Com., CA, LLB

Keerthiga Padmanabhan

CA, Greater Mumbai

784 Answers

27 Consultations

Talk to Keerthiga Padmanabhan

Dear all,

Well in that case he needs to register under normal tax person and will charge me 18% gst on his service....Now the tricky part is

1. Being a Tshirt manufacturer, i buy fabric @ 5% gst, in my case every single tshirt consumes 50rs worth of fabric, here i paid gst Rs. 2.50,

2. My jobworker doing 50rs worth stitching jobwork on the fabric for which he charge me Rs. 9 as GST.

3. Now I m selling the tshirt to wholesalers @120 for which i charge them Rs. 6

Now the input tax credit ll b 2.50+9 = 11.50 while i receive only 6, this input tax credit i cant seek refund since i m doing business within india (i heard that exporters can get the refund)...

How to handle this situation? Anyway to get the refund?

Asked 8 years ago

In GST, stitching will be treated as supply and not manufacturing and a service provider can't opt for composition scheme. Hence, that stitching job worker can't opt for composition.