GST Invoicing Rules for Job Work, Composite & Mixed Supply!

Consider you have a business where raw materials are sent to the vendors for processing, bundled multiple products in a single package, or mixed product categories are sold together. This looks quite easy, doesn’t it? But, when we talk about GST invoicing rules it becomes a bit tedious. 

How do you create an invoice for job work without getting into unnecessary tax liabilities? What are the GST rates applied on composite and mixed supplies? Do they impact the pricing strategy? Do all these queries continuously strike your mind? Scroll down to the article and get your queries answered. 

Let’s understand invoicing rules under GST for job work, composite supply, and mixed supply. 

Job Work and GST Invoicing Rules: A 5-Min Read! 

What exactly is a Job Work? 

Job work is more about processing goods or products that are owned by another registered individual. The ownership stays with the principal manufacturer, while the job worker just offers the desired services. 

GST Invoicing Rules for Job Work! 

1. Dispatching Products for Processing 

• The primary manufacturer of the goods needs to issue a delivery challan and not a tax invoice when sending the products for processing to the job worker. 
• Product description, quantity, value, supplier and recipient GSTN, and transport information should be incorporated in the challan. 
•  Rule 45 of the CGST ACT says, ITC-04 must be filled to track the movement of goods for processing. 

2. Goods are back from Job Work to Principal 

• When returning the goods after processing, the job worker should send the delivery challan. 
• According to the GST invoice rules, the registered job worker under GST can issue a tax invoice to claim their service charges. 
• Goods will be considered as supply if not returned within one year for inputs and three years for capital goods. These goods then will be taxed based on the supply tax rates. 

3. Service Invoice 

• The job worker must issue a tax invoice to ask for the service charges, including applicable GST rates. 
• The GST applicable rates are generally 12% or 18% 
• The tax invoice is sent to the principal manufacturer, who can avail of the input tax credit on the invoice. 

Records to Be Maintained for GST-compliant Invoices! 

• Get all the supplier and recipient details like name, address, and GSTIN. 
• Record detailed description of goods sent for job work like quantity, value, and processing type (coating, assembling, welding). 
• Make a note of applicable GST rate, tax amount, and HSN code for the processed goods. 
• Issue delivery challan and E-way bill for a value that exceeds ₹50,000. 

GST Invoicing Rules for Composite Supply: A Quick Read! 

Understand Composite Supply 

Composite supply is a supply compromising two or more products or services, which are naturally coupled with each other to be sold together. Out of the bundled products one is a principal supply, where other items are sold as a combination with it. They cannot be sold separately. 

GST Invoicing Rules for Composition Supply 

1. Single Tax Invoice 

A single tax invoice should be issued that incorporates all the details in the composite supply. 

Here are the details the tax invoice should cater to:

• Recipient and supplier information 
• HSN code of the principal supply 
• The total value of the supply 
• Applied GST rates and Amount
• Invoice issuing date 
• Invoice number 

2. HSN Code

• Under GST Invoicing rules, the HSN code of the principal product is considered for invoice purposes. 

3. Applied GST Rates 

• The GST rates applicable to the primary supply are considered for the entire invoice. 
• Let’s consider an example: You have booked a room in a hotel that applies 18% GST on your accommodation charges. It offers you a complimentary breakfast that applies 5% GST charges. The entire invoice you receive will be taxed at 18% GST as the hotel room becomes the principal supply here. 

Records to Be Maintained for GST-compliant Invoices!

• Supplier and recipient details. 
• Invoicing number and invoice issuing date. 
• Detailed description of services supplied, total invoice value, quantity and unit price. 
• Mandatory declaration for taxable persons. 
• Place of supply, and e-way bills.  

Mixed Supply and Invoice Rules as Per GST: Key Takeaways! 

Understanding Mixed Supply! 

A mixed supply under GST invoicing rules is a combination of two or more products or services, which can be sold separately. These products are not naturally bundled together, but are coupled for a single price. In this case, the GST rate applied to the highest-taxed product is levied on the entire tax invoice. 

Invoicing Rules under GST for Mixed Supply 

1. A Single Tax Invoice 

• A single invoice should be issued for the entire mixed supply

2. Applied GST Rates 

• The GST rate applied to the highest tax item is levied on the entire invoice for the bundled products. 
• Let’s consider an example: Consider you are buying a gift hamper for a close friend. It has exotic chocolates (18% GST), milk-based beverages (28% GST), and dry fruits (5% GST). For invoice rules as per GST, as 28% is the highest applicable GST among all, it will be applied to the entire invoice. 

3. HSN Code 

• For tax invoices under GST Invoice rules, the HSN code of the highest-taxed product in the bundle is considered.

4. Invoicing Details 

• Supplier and recipient information 
• Total supply value 
• HSN code of the highest taxed product 
• Highest GST rate applied and amount
• Invoice number 
• Invoice issuing date 

Records to Be Maintained for GST-compliant Invoices! 

• Supplier and recipient details like name, address, and GSTIN number. 
• Invoice number and date of issuing. 
• List of all items in the mixed supply, HSN/SAC codes, and state the principal supply. 
• GST rates applicable and breakup based on location. 
• Place of supply, e-way bills, and payment modes.  

Let’s Conclude 

Whether you are a manufacturer, a retailer, or a service provider; understanding GST invoicing rules for job work, composite supply, and mixed supply becomes crucial for business. Hopefully you have understood the GST billing rules. For further queries, feel free to connect to us! 

Creating GST-compliant invoices becomes a bit difficult with too many rules in place! But don’t worry; Munim accounting and GST software are here to your rescue. Start creating GST-compliant invoices with us right away! Sign up today! 

FAQs

1. How do you make a GST invoice for a job? 

• The manufacturer should send goods to the job worker with the updated delivery challan. 
• When receiving the supply, the job worker should verify the products with the challan details. 
• Process all the goods. 
• While sending the goods back, the job worker should prepare a tax invoice that contains supplier/ recipient details, GSTN number, product details, invoice number, and date. 
• Send the products and invoice to the manufacturer or principal supplier. 
• Based on the GST invoicing rules, the principal supplier should pay the taxes. 
• Claim ITC for GST paid on raw material or semi-furnished goods. 
• Maintain records. 

2. What is the limit of composite dealers under the GST invoice rule? 

Rs. 1.5Cr is the composite limit for dealers under GST. 

3. Can the Composite dealer issue a tax invoice? 

No, composite dealers cannot issue a tax invoice. 

4. What is the GST rate for mixed supply under GST invoice rules?

The GST rate for mixed supply is generally the highest rate applied to the bundled product.