Brass scrap is sent for job work to make Brass rods (HSN Code - 74072120). What will be the GST rate on Job Work? Are there any changes in the GST rates in notification no. 26/2019 dated 22/11/2019. Kindly explain the job work definition.

Reply— As per Section 2(68) of CGST Act, Job work means any treatment or process undertaken by a person on goods belonging to another registered person. And rate of tax is 12% on job work service.

As stated in query, a new product 'brass rods' will be manufactured which is not a job work process, in our opinion it will cover under Manufacturing services on physical inputs owned by others and will attract 18% GST.

Please refer Circular No.126/45/2019-GST] Dated: 22nd November, 2019 in which following clarification is given:-

The matter has been examined. The entries at items (id) and (iv) under heading 9988 read as under:

3. Job work has been defined in CGST Act as under.

“Job work means any treatment or processing undertaken by a person on goods belonging to another registered person and the expression ‘Job worker’ shall be construed accordingly.”

4. In view of the above, it may be seen that there is a clear demarcation between scope of the entries at item (id) and item (iv) under heading 9988 of Notification No.11/2017-Central Tax (Rate) (S.No.25) dated 28-06-2017. Entry at item (id) covers only Job work services as defined in section 2(68) of CGST Act, 2017, that is, services by way of treatment or processing undertaken by a person on goods belonging to another registered person. On the other hand, the entry at item (iv) specifically excludes the services covered by entry at item (id), and therefore, covers only such services which are carried out on physical inputs (goods) which are owned by persons other than those registered under the CGST Act.