Indirect Tax Laws · Job Work

ITC on Capital Goods Sent for Job Work

Updated 5 October 2026

A principal keeps ITC on capital goods sent for job work if they come back, or are supplied from the job worker's premises as allowed, within three years. If not, they are deemed supplied on the day sent out, so tax and interest are payable. Moulds, dies, jigs, fixtures and tools are not subject to the three-year limit.

Understand ITC on Capital Goods Sent for Job Work

In job work, you send goods to another person who processes them for you. The goods stay yours. For capital goods, such as machinery sent for repair or fitting, GST lets you send them out without treating the movement as a supply. You also keep the ITC you already took on them.

Two provisions work together here. Section 19 deals with the principal's ITC on goods sent for job work. Section 19(1) covers inputs, which must come back, or be supplied from the job worker's premises as allowed, within one year. Section 19(2) covers capital goods, with a period of three years. The principal may take ITC on these goods even when they go directly to the job worker, subject to the time limits. Section 19(3) gives the consequence of missing the time limit: deemed supply and interest. Section 19(4) says the time limits do not apply to moulds, dies, jigs, fixtures and tools. Section 143 is the job work provision for goods sent out by the principal. Do not attribute the one-year and three-year periods to it.

This relief is not open-ended. The law gives a three-year window for capital goods. The clock starts on the day the goods are sent out. Within that period the goods must either return to you, or be supplied from the job worker's premises in the manner the job work provisions allow.

If neither happens in time, the law treats the goods as supplied by you to the job worker on the day they were sent out. You then pay GST on that supply at the rate applicable to the goods, with interest. That is why the date of sending out matters more than the date of expiry.

There is one exception. Moulds and dies, jigs and fixtures, and tools are not subject to the one-year and three-year limits, by Section 19(4). These items usually stay with the job worker for long production runs. So the deemed supply that arises on lapse of time does not arise for them. The other job work conditions must still be met.

The idea behind the rule is simple. Capital goods that leave your control for good are really sold. GST does not let you use job work as a way to move goods out without tax.

Key rules to remember

Time limit for capital goods: Capital goods (other than moulds, dies, jigs, fixtures, tools) must return, or be supplied from the job worker's premises as allowed, within 3 years of being sent out (Section 19(2)); The three-year period sits in Section 19(2). The period runs from the date the goods are sent out under challan, not from the date of the job work contract.
Exception to the time limit: Moulds and dies, jigs and fixtures, tools → time limits do not apply (Section 19(4)); Because the time limits do not apply, the deemed supply on lapse of time does not arise for these items. The other job work conditions must still be met. All other capital goods, including machinery, are covered by the three-year period.
Consequence of non-return: Not returned / not supplied in time → deemed supply by principal to job worker on the day goods were sent out (Section 19(3)); The principal must pay tax on the deemed supply at the rate applicable to the goods, with interest. Do not state an interest start date unless you can cite the provision that fixes it.
Comparison with inputs: Inputs: 1 year (Section 19(1)) | Capital goods: 3 years (Section 19(2)) | Moulds, dies, jigs, fixtures, tools: not subject to these limits (Section 19(4)); Learn the three positions together. Examiners often swap them. The deemed supply and interest consequence of missing the period is in Section 19(3).
ITC at the time of sending: Principal may take ITC on inputs or capital goods sent to a job worker, including goods sent directly to the job worker, subject to the time limits (Section 19(1)-(2)); ITC is not reversed at the time of sending as long as the goods return, or are supplied as allowed, within the time limit. If the time limit is missed, the deemed supply and interest consequence in Section 19(3) applies.

How to solve ITC on Capital Goods Sent for Job Work questions

Use the same sequence for any question on capital goods sent for job work. Check the type of goods first, because that decides whether the three-year period applies.

1Identify the goods. Are they ordinary capital goods, such as a machine, or moulds, dies, jigs, fixtures or tools?
2If they are moulds, dies, jigs, fixtures or tools, state that the time limits do not apply to them (Section 19(4)), so no deemed supply arises on lapse of time. Then check the other job work conditions.
3For other capital goods, fix the date on which the goods were sent out. Use the challan date.
4Count three years from that date (Section 19(2)). Check whether the goods came back, or were supplied from the job worker's premises as the job work provisions allow, within that period.
5If yes, there is no supply on sending and ITC stays with the principal. If no, state that the goods are deemed supplied on the day they were sent out (Section 19(3)).
6Compute GST on the deemed supply at the rate applicable to those goods. State that interest is also payable. Give an interest figure only if the question gives the facts and the basis for it.
7Write the conclusion in provision-facts-conclusion form, naming the principal's liability.

Quickest way: Type, date, three years

When to use it: Use this for MCQs and short case scenarios where you need a quick yes or no on tax liability.

Ask: moulds, dies, jigs, fixtures or tools? If yes, the one-year and three-year limits do not apply. Then check the other job work conditions.
If no, note the date sent out and add three years.
Check whether the goods returned or were supplied from the job worker's premises before that date.
If not, answer: deemed supply on the date of sending out, so tax and interest are payable by the principal.

Common mistakes in ITC on Capital Goods Sent for Job Work

Applying the one-year limit for inputs to capital goods.
Both rules sit in the same provision and students mix up the periods.
Fix: Remember inputs one year, capital goods three years. Check what is being sent before you count.
Applying the three-year limit to moulds and dies.
Students see 'capital goods' and forget the exception.
Fix: Always scan the question for moulds, dies, jigs, fixtures and tools before you do any counting.
Treating the deemed supply as taking place on the last day of the three years.
Students think the supply happens when the period lapses.
Fix: The deemed supply date is the day the goods were sent out, not the day the period lapses.
Saying the principal must reverse ITC when goods are sent out.
Students confuse job work with a transfer or sale.
Fix: Under Section 19(1)-(2), the principal may take ITC on goods sent to a job worker, including goods sent directly to the job worker, subject to the time limits. No reversal is needed on sending. Tax arises only if the goods are not returned or supplied in time (Section 19(3)).
Naming the job worker as the person liable to pay tax on the deemed supply.
The goods are physically with the job worker, so liability seems to follow.
Fix: The law says the principal is deemed to have supplied the goods to the job worker. The principal pays the tax.
Counting the period from the date the job work order or contract was signed.
Students use the date that appears first in the facts.
Fix: Count from the date the goods actually left the principal's premises, as shown on the challan.
Citing Section 143 as the source of the one-year and three-year periods, or citing wrong sub-sections of Section 19.
Students link the job work time limits to the job work procedure section and guess sub-section numbers.
Fix: Cite Section 19(1) for inputs (one year) and Section 19(2) for capital goods (three years). Cite Section 19(3) for the deemed supply and interest consequence, and Section 19(4) for moulds, dies, jigs, fixtures and tools. Do not attribute the periods to Section 143.

Worked examples

Example 1

Mehta Industries, a registered manufacturer, sent a machine to a job worker for fitting an attachment on 10 May 2024 under a delivery challan. It had taken ITC on the machine. The machine has not returned and has not been supplied from the job worker's premises by 9 May 2027. The machine's value is ₹10,00,000 and GST is 18%. What is the position?

Show the solution

Provision: under Section 19(2), for capital goods other than moulds, dies, jigs, fixtures and tools, the period is three years from the day they are sent out. On non-return, the goods are deemed supplied on the day they were sent out, and interest is payable (Section 19(3)).
Facts: the machine is ordinary capital goods. It was sent on 10 May 2024. The three years ended on 9 May 2027 without return or permitted supply.
Result: the machine is deemed supplied by Mehta Industries to the job worker on 10 May 2024.
Tax: GST at the rate applicable to the machine, 18% of ₹10,00,000 = ₹1,80,000, payable by Mehta Industries.
Interest: also payable on the tax. The question gives no payment date or basis, so no interest figure is computed.

Answer: The machine is deemed supplied on 10 May 2024. Mehta Industries must pay GST of ₹1,80,000 on the deemed supply, plus interest as the law provides.

Example 2

Shah Auto sent a die and a CNC machine to a job worker on 1 April 2023 under challans. The die is still with the job worker on 1 July 2027. The CNC machine came back on 15 February 2026. Is there any deemed supply?

Show the solution

Die: it is in the excluded category (moulds and dies, jigs and fixtures, tools), so the time limits do not apply under Section 19(4). Staying with the job worker for more than four years does not create a deemed supply on lapse of time.
CNC machine: it is ordinary capital goods, so the three-year period in Section 19(2) applies. The period ran to 31 March 2026.
The machine returned on 15 February 2026, which is within three years.
So there is no deemed supply for either item, assuming the other job work conditions were met.

Answer: No deemed supply arises on lapse of time. The time limits do not apply to the die, and the CNC machine returned within three years. Shah Auto keeps its ITC, provided the other job work conditions are met.

Exam tips

In an MCQ, look for the words mould, die, jig, fixture or tool. They usually decide the answer.
Write the sending-out date clearly in your working. Markers look for it as the date of deemed supply.
Mention that the deemed supply is by the principal, and say that interest applies. These two points are often missed.
Present the three periods together if the question mixes inputs and capital goods: one year, three years, and no time limit for moulds, dies, jigs, fixtures and tools.
Cite Section 19(1) for inputs (one year) and Section 19(2) for capital goods (three years). Cite Section 19(3) for the deemed supply and interest consequence, and Section 19(4) for moulds, dies, jigs, fixtures and tools. Do not attribute the periods to Section 143.

Practice questions from Job Work

ITC on Capital Goods Sent for Job Work: frequently asked questions

What is the time limit for capital goods sent for job work under GST?

It is three years from the day the goods are sent out (Section 19(2)). The goods must return to the principal, or be supplied from the job worker's premises as the job work provisions allow, within that time.

Do moulds and dies have a time limit under the job work provisions?

No. Under Section 19(4), the time limits do not apply to moulds and dies, jigs and fixtures, or tools sent to a job worker. So the deemed supply that arises on lapse of time does not arise for these items. The other job work conditions still apply.

What happens if capital goods are not returned in three years?

They are deemed supplied by the principal to the job worker on the day they were sent out (Section 19(3)). The principal must pay GST on that supply at the rate applicable to the goods, with interest.

Is ITC reversed when capital goods are sent for job work?

Not if the time limit is met. Under Section 19(1)-(2), the principal may take ITC on goods sent to a job worker, including goods sent directly to the job worker. Tax becomes payable only if the goods are not returned or supplied within the time allowed.