Section 19 of CGST Act: Input Tax Credit on Inputs & Capital Goods Sent for Job Work – Detailed Guide

Section 19 of the CGST Act, 2017 allows the principal to claim Input Tax Credit (ITC) on inputs and capital goods sent for job work, even if such goods are sent directly to the job worker without being brought to the principal’s premises. However, the inputs must be returned within one year and capital goods within three years to avoid them being treated as deemed supplies, triggering tax liability.

Exceptions apply to tools like moulds, dies, jigs, and fixtures, which are not subject to the return timelines. This provision ensures uninterrupted ITC flow in manufacturing and processing industries, and AUBSP provides a reliable and detailed interpretation to aid compliance.

GST Section 19: Input Tax Credit (ITC) on Inputs and Capital Goods Sent for Job Work

When it comes to indirect taxation under the GST regime, understanding Section 19 of the CGST Act, 2017 is crucial for businesses engaged in job work processes. This provision provides clarity and structure on Input Tax Credit (ITC) availability for goods sent to job workers — a common practice in manufacturing and related industries.

In this article, AUBSP provides a comprehensive breakdown of Section 19, combining legislative detail with practical explanation to help businesses comply effectively.

Understanding Section 19: A User-Friendly Overview by AUBSP

1. Eligibility for Input Tax Credit on Inputs (Section 19(1))

Under GST, the principal — the registered person sending goods for job work — is allowed to avail ITC on inputs sent to a job worker. This benefit is available even when goods are dispatched to the job worker’s premises, instead of the principal’s own location.

🟢 AUBSP Tip: Always document the dispatch and receipt of goods for audit and compliance purposes.

2. ITC on Inputs Sent Directly to Job Worker (Section 19(2))

Even if inputs are never brought to the principal’s business premises and are directly sent to the job worker, ITC is still allowed. This is an exception to the general ITC rule that usually requires receipt of goods at the registered place of business.

3. Time Limit for Return of Inputs (Section 19(3))

To avoid being treated as a deemed supply, inputs must be returned within one year from the date they were sent.

📅 Important Time Calculation:

If the goods are not returned or supplied from the job worker’s premises within the stipulated time, it is considered that the principal has supplied the goods to the job worker on the original date of dispatch. This triggers tax liability.

4. ITC on Capital Goods Sent for Job Work (Section 19(4) and 19(5))

Just like inputs, capital goods sent for job work are also eligible for input tax credit, regardless of whether they pass through the principal’s business premises or go directly to the job worker.

5. Time Limit for Return of Capital Goods (Section 19(6))

The time limit for returning capital goods is three years from the date of dispatch or receipt.

📅 Capital Goods Time Limit Table:

If the capital goods are not returned within three years, it is treated as a deemed supply by the principal on the original dispatch date, and tax becomes payable.

6. Exception for Tools and Equipment (Section 19(7))

There is a clear exclusion for certain tools and equipment from the time limit provisions. These items are not treated as deemed supplies, even if they are not returned:

• Moulds
• Dies
• Jigs
• Fixtures
• Tools

🟢 AUBSP Clarifies: This exception recognizes that such tools are often retained long-term by job workers for ongoing projects.

Legal Definition of ‘Principal’

The term “principal” for the purposes of Section 19 refers to the person as defined under Section 143 of the CGST Act. This person is responsible for sending goods for job work and is entitled to ITC under specified conditions.

Conclusion by AUBSP

Section 19 of the CGST Act plays a vital role in ensuring that manufacturers and other businesses involved in job work do not lose their input tax credit benefits simply because of logistical requirements. As long as the goods are returned within the prescribed time or otherwise legally supplied, ITC remains intact.

AUBSP encourages businesses to maintain accurate records of goods movement, ensure timely returns, and consult professionals for compliance. Understanding the timelines and provisions under Section 19 can save businesses from unnecessary tax liabilities and disputes.

Still Have Questions?

Let AUBSP help you navigate complex GST provisions with expert guidance and clarity. Stay compliant and make informed tax decisions — because every rupee of credit counts.

What is Section 19 of the CGST Act, 2017?
Section 19 deals with the availability of Input Tax Credit (ITC) on inputs and capital goods sent for job work by the principal.

Who is considered a ‘principal’ under Section 19?
A ‘principal’ refers to a registered person who sends goods to a job worker for job work as defined in Section 143 of the CGST Act.

Is ITC available if inputs are directly sent to a job worker without bringing them to the principal’s premises?
Yes, the principal is allowed to claim ITC even if inputs are directly sent to a job worker.

What is the time limit for returning inputs sent for job work?
Inputs must be returned within one year from the date they are sent out or received by the job worker if sent directly.

What is the time limit for returning capital goods sent for job work?
Capital goods must be returned within three years from the date of dispatch or receipt by the job worker if sent directly.

What happens if inputs are not returned within one year?
If inputs are not returned or supplied from the job worker’s premises within one year, they are deemed to have been supplied by the principal on the date of dispatch.

What if capital goods are not returned within three years?
If capital goods are not received back within three years, it is treated as a deemed supply by the principal on the date they were sent out.

Are moulds, dies, jigs, fixtures, and tools subject to the time limits for return?
No, such tools are exempt from the one-year and three-year return conditions under Section 19(7).

Can ITC be claimed on capital goods sent directly to the job worker?
Yes, ITC can be claimed on capital goods sent directly to a job worker without being brought to the principal’s premises.

Is ITC allowed if goods are never brought to the principal’s place of business?
Yes, both inputs and capital goods sent directly to job workers are eligible for ITC.

What are the consequences of deemed supply under Section 19?
When inputs or capital goods are not returned in time, they are deemed to be supplied, and GST becomes payable by the principal with applicable interest.

How is the one-year or three-year period calculated for direct dispatches?
If goods are sent directly to the job worker, the period is calculated from the date of receipt by the job worker, not the dispatch date.

Which GST provision deals with the job work process?
Section 143 of the CGST Act governs the procedure and conditions for job work.

Can the principal supply goods directly from the job worker’s premises?
Yes, the principal can supply goods directly from the job worker’s premises if declared as an additional place of business, or the job worker is registered.

Is documentation necessary when sending goods for job work?
Yes, the principal must maintain proper documentation such as delivery challans, job work records, and file Form ITC-04 as applicable.

Can input services related to job work also be claimed for ITC?
Section 19 primarily deals with inputs and capital goods; input services are not specifically covered under this section.

Is there any specific notification enforcing Section 19?
Yes, Section 19 came into force on 01.07.2017 via Notification No. 9/2017-Central Tax, G.S.R. 658(E), dated 28.06.2017.

Does Section 19 override the general ITC conditions of Section 16?
Yes, for the purpose of job work, Section 19 provides exceptions to clause (b) of sub-section (2) of Section 16.

Can unregistered job workers be involved under Section 19?
Yes, a principal can send goods to an unregistered job worker, but compliance regarding returns and deemed supply still applies.

Is ITC reversed if goods are not returned within the prescribed time?
No formal reversal is required, but it is treated as an outward supply and GST must be paid accordingly.

Can the principal extend the one-year or three-year timeline?
No, the CGST Act does not currently provide for an extension of these statutory timelines under Section 19.