Amit Ltd., a registered supplier, is engaged in manufacturing activity. It also gives job work to other units. It purchased raw materials on 5 th June, 2018 for ₹ 2 lakhs (+GST @ 12%). It dispatched 50% of the raw materi

ITC on raw materials/capital goods sent to job worker Amit Ltd paid GST @ 12% on the goods which works out to ₹ 24,000. As per Section 19(1) of the CGST Act, 2017, it can claim input tax credit in entirety regardless of the fact that it has wholly or partially sent such goods to a job worker. It dispatched 50% of the raw materials on 10.07.2018 to the job worker. The time limit is that the job worker must return the raw material as such or as processed goods within 1 year from the date of dispatch by Amit Ltd. In the case of delay, the raw material so sent to job worker would be treated as supply from the date when the goods were originally sent out. Amit Ltd would be required to pay tax along with interest. Where the raw material is dispatched directly to the job worker i.e. on 05.06.2018, the time limit of one year would be counted from that date of receipt of raw material by the job worker. Thus, in case 50% of the raw material is directly sent to the job worker, the time limit for return of such raw material as such or as processed goods would be one year from the date of receipt of such raw material by the job worker. In the case of capital goods, the time limit for return is 3 years instead of 1 year. If the goods are not returned by the job worker within 3 years then such capital goods would be deemed to have been supplied to the job worker on the date when the same were originally sent and therefore Amit Ltd would be required to pay tax on such capital goods along with interest.