First, two digits represent the term ‘service’; the next two reflect ‘main nature of service,’ and the last two identify ‘detailed nature of service’. As the domain of GST is so vast, said 6 digits code, again classify further codes to recognize minute details of similar services and charge tax with different measurements. Focusing on SAC Group Code 9988 writer will enumerate all services mentioned in the sub-classification. Then try to comment on Job Work with its GST rate implications. Briefing with a major aspect of 'Job Work' this article will end with some personal comments.
SAC Group Code: 9988 [Job Work] Understanding its literal meaning, Job Work is an outsource activity comprising any treatment or process of working on different input goods (raw material) or semi-finished capital goods to transform them into finished/final goods. As per the definition enumerated in subsection 2(68) of Central Goods & Service Tax (CGST) Act, 2017 (Act), said Job Work activity has to be undertaken using input goods owned by another registered person, i.e., principal (defined u/s 19 of the Act). It is important to note that Job Work can be any entity (registered or unregistered); however, the principal has to be a registered entity. Its duty complies with numerous compliances enumerated in the GST regime like; issuing challans, maintaining details of input/ capital goods and Job Work premises, etc.
SAC Group Code: 9988 [Sub-Classification]
Considering the endless manufacturing processes, the scope of Job Work is very extensive that’s why the department has further divided this service into further nine parts, namely: he department has further divided this service into further nine parts namely:
S. No.
SAC Code
Description
99881
Food, beverage and tobacco manufacturing services
[998811 to 998819]
It covers the processing/manufacturing of meat, fish, fruits, vegetables, dairy, beverage & tobacco.
99882
Textile, wearing apparel and leather manufacturing services [998821 to 998823]
99883
Wood and paper manufacturing services [998831 to 998832]
99884
Petroleum, chemical and pharmaceutical product manufacturing services [998841 to 998843]
99885
Rubber, plastic and other non-metallic mineral product manufacturing services [998851 to 998853]
99886
Basic metal manufacturing services [998860]
99887
Fabricated metal product, machinery and equipment manufacturing services [998871 to 998877]
It covers structural metal (tank reservoir & steam generator), weapon/ammunition, electronic, optical, machinery (general or special) and other fabricated metal and electronic devices.
99888
Transport equipment manufacturing services
[998881 to 998882]
It covers Motor vehicle/trailer & other transport equipments
99889
Other manufacturing services [998891 to 998898]
It includes furniture, jewellery (real or imitation), musical instruments, sports, game/toys, medical/dental instruments & supplies or any other services.
Job Work: Domain and GST Rate Implications
Readers must understand that the Job Work definition is not descriptive with the above discussion. Therefore, it covers numerous services, including any manufacturing/processing/finishing activity. Maximum of the manufacturers use this activity of Job Work as it remarkably reduces the capital and operational cost of final products.
Talking about GST implication, the domain of Job Work services is mostly in dispute as to its covers end number of services that a principal uses to reduce its costing. Even the GST department has not framed a rigid GST implication as it varies due to minute changes like the activity. Generally, the GST rate on Job Work varies from Nil to 12/18%, balanced by claiming input tax credit by the principal manufacturer.
Conclusion
Aligning the discussion mentioned above, the writer wants to confess that the concerned subject matter has a very wide scope. It comprises more than thirty services whereby each activity has its own space in manufacturing. GST rate on Job Work is updated in every GST Council meeting, so manufacturers should always watch the latest notifications/circulars.