Introduction

The introduction of Goods and Services Tax (GST) has revolutionized business compliance in India, especially for Micro, Small, and Medium Enterprises (MSMEs). Among the critical GST filings, Form ITC-04 holds significant importance for businesses engaged in job work activities. This form tracks the movement of goods sent to job workers and received back, ensuring smooth input tax credit (ITC) claims and efficient supply chain management.

In this comprehensive guide, we’ll explore the ITC-04 filing process, its benefits, exemptions, penalties for non-compliance, and practical tips to streamline GST compliance.

What is GST ITC-04 Form?

GST ITC-04, also known as the “Goods Sent to Job Work and Received Back Form,” is a periodic return that MSMEs must file to report the movement of goods sent to job workers for processing, assembly, or manufacturing. This form ensures:

• Transparency in supply chain operations.
• Accurate tracking of input materials and semi-finished goods.
• Seamless claim of Input Tax Credit (ITC).

Key Features of ITC-04

• Tracks Goods Movement: Monitors raw materials and semi-finished goods sent for job work.
• Enables ITC Claims: Facilitates accurate ITC claims related to job work processes.
• Enhances Compliance: Strengthens transparency in GST records.

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Who Needs to File ITC-04?

Form ITC-04 is mandatory for:

• Manufacturers or principal businesses that send goods to job workers for processing.
• Job workers who further send goods to another job worker or return them to the principal.

Important: Businesses with an annual turnover above ₹5 crore must file ITC-04 semi-annually, while others can file annually.

ITC-04 Filing Process

Step-by-Step Guide:

1. Collect Information:
   • GSTIN of job workers.
   • Description, quantity, and HSN code of goods sent/received.
   • Dispatch and receipt dates.
2. Compile Data:
   • Use GST-compliant accounting software or Excel sheets.
3. Login to GST Portal:
   • Go to www.gst.gov.in
   • Navigate: Services > Returns > ITC Forms > ITC-04
4. Fill in the Form:
   • Enter details like job worker’s GSTIN, goods description, and transaction dates.
5. Verify and Submit:
   • Use Digital Signature Certificate (DSC) or Aadhaar-based OTP for final submission.

Filing Frequency and Turnover Limits

Annual Turnover	Filing Frequency	Due Dates
Above ₹5 crore	Half-Yearly (Apr-Sep, Oct-Mar)	25th October, 25th April
Up to ₹5 crore	Yearly	25th April

Relaxation Under Rule 45(3):

MSMEs with an annual turnover of up to ₹5 crore can file annually instead of semi-annually.

Benefits of ITC-04 Filing

1. Ensures Compliance:
   • Filing ITC-04 ensures adherence to GST regulations.
2. Input Tax Credit (ITC):
   • Enables MSMEs to claim ITC, reducing tax liability.
3. Improves Supply Chain Efficiency:
   • Tracks goods movement, minimizing bottlenecks and enhancing production.
4. payer will need to adjust the ITC in their next ITC-04 return.

Common Mistakes to Avoid While Filing ITC-04

• Incorrect GSTIN of Job Workers: Double-check GSTIN entries to avoid rejection.
• Missing Transaction Dates: Always enter accurate dispatch and receipt dates.
• Inconsistent Quantity Records: Ensure the quantity sent matches the records upon return.
• Delayed Filing: Late submissions can lead to compliance issues and potential penalties.
• Improper Reconciliation: Regularly reconcile job work records with ITC claims to prevent discrepancies.

Turnover Limits and Exemptions

Turnover Limits:

• Filing frequency depends on the annual turnover of the business.

Exemptions from ITC-04 Filing:

• Goods used for exempt or non-taxable supplies.
• Goods not returned within 12 months.
• Goods damaged or destroyed during job work.

Explore More: Threshold Limit for GST Registration

Comparison: ITC-04 vs. Other GST Forms

Aspect	ITC-04	GSTR-1	GSTR-3B
Purpose	Reporting goods sent for job work	Reporting outward supplies	Summary of inward & outward supplies
Frequency	Semi-annually/Annually	Monthly/Quarterly	Monthly
Applicable To	MSMEs engaged in job work	All registered GST taxpayers	All registered GST taxpayers
Key Data Required	Goods movement details, job worker info	Invoice-wise sales data	Summary data of sales & purchases
Impact on ITC	Directly impacts ITC claims	Affects tax liability calculation	Determines final tax payable

Penalties for Non-Compliance

While there is no specific late fee for ITC-04, non-compliance can attract penalties under Section 125 of the CGST Act.

Penalty Details:

• Up to ₹25,000 for non-filing or incorrect filing.

Additional Consequences:

• Demand notices for tax payment with interest.
• Possible suspension of GST registration.

How to Avoid Penalties:

• File ITC-04 before the due dates.
• Use GST-compliant software for automated reminders.
• Maintain updated job work records.

Practical Example

Scenario: ABC Manufacturing sends 1,000 units of semi-finished goods to XYZ Job Works. XYZ processes the goods and returns 900 units within 12 months, with 100 units scrapped.

Steps for ABC Manufacturing:

• Record dispatch and return details accurately.
• File ITC-04 for the returned 900 units.
• Reverse ITC for the scrapped 100 units.

FAQs

1. Is ITC-04 mandatory for all job work transactions?
   Yes, if goods are sent for job work, ITC-04 filing is mandatory.
2. What if goods are not returned within 12 months?
   ITC claimed must be reversed in the next ITC-04 return.
3. Can errors in ITC-04 be corrected?
   Yes, amendments can be made in subsequent filing periods.
4. What documents are needed for ITC-04 filing?
   GSTIN of job workers, delivery challans, and records of goods movement.

Conclusion

Form ITC-04 is crucial for MSMEs involved in job work. Timely and accurate filing ensures GST compliance, seamless ITC claims, and optimized supply chain operations. By leveraging automation tools, maintaining proper records, and adhering to deadlines, businesses can avoid penalties and enhance financial efficiency.

Stay compliant. File ITC-04 on time. Optimize your tax benefits!

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Related blog:- Types of Services Under the GST Regime in India