Section 19 of CGST Act, 2017 : Section 19: Taking Input Tax Credit In Respect Of Inputs And Capital Goods Sent For Job Work

Explanation using Example

Imagine a company, 'ABC Fashions', which manufactures garments. The company sends raw fabric to a job worker, 'XYZ Tailors', for stitching and embroidery. According to Section 19(1) of the Central Goods and Services Tax Act, 2017, 'ABC Fashions' can claim input tax credit on the GST paid for the raw fabric sent to 'XYZ Tailors' for the job work.

Moreover, under Section 19(2), 'ABC Fashions' is entitled to take the input tax credit even if they send the fabric directly to 'XYZ Tailors' without bringing it to their own business premises first.

If 'XYZ Tailors' does not return the embroidered fabric within one year, as per Section 19(3), it will be considered that 'ABC Fashions' has supplied the fabric to 'XYZ Tailors' on the day it was sent out, potentially altering the input tax credit claims.

Similarly, if 'ABC Fashions' sends sewing machines (capital goods) to 'XYZ Tailors' for job work, they can claim input tax credit as per Section 19(4) and Section 19(5), and if the machines are not returned within three years, it will be deemed a supply from the day they were sent as per Section 19(6).

However, if 'ABC Fashions' sends tools like scissors or needles to 'XYZ Tailors', the provisions of subsections (3) and (6) will not apply, as per Section 19(7).