GST ITC 04 Form

What is the GST ITC-04 Form?

GST ITC-04 is a mandatory form that must be filed by manufacturers or principals who send goods to job workers for processing, assembly, or finishing. It records the movement of inputs and capital goods sent to job workers and ensures that ITC is availed appropriately on returned goods.

The primary objective of ITC-04 is to keep track of the raw materials or semi-finished goods that are dispatched for job work and to prevent any misuse of ITC.
 

Key Features of ITC-04 Form:

• Tracks movement of goods sent to job workers and received back.
• Ensures seamless ITC claims, reducing tax liability.
• Improves supply chain efficiency by documenting goods at different job work stages.
• Enhances compliance with GST rules and regulations.
   

Who Needs to File GST ITC-04?

GST ITC-04 must be filed by businesses that:

• Send inputs or capital goods to job workers for further processing or production.
• Receive goods back after job work is completed.
• Send goods from one job worker to another for further processing.
• Supply goods directly from the job worker’s premises to customers.

Exemption from Filing ITC-04:

• Businesses with turnover below ₹5 crore can file ITC-04 annually instead of half-yearly.
• If goods sent for job work do not qualify for ITC, ITC-04 may not be necessary.
• Certain categories of capital goods (like jigs, dies, and moulds) are exempt from ITC-04 reporting.
   

Filing Frequency and Due Dates

The frequency of filing ITC-04 depends on the annual turnover of the business:

Businesses with lower turnover have the flexibility to file once a year, reducing their compliance burden.

Step-by-Step Guide to Filing GST ITC-04

Collect Required Data

Before filing, ensure you have:

• GSTIN of job workers
• Description and quantity of goods sent and received
• Date of dispatch and return
• Details of any goods sent to another job worker

Login to GST Portal

• Visit the GST Portal (www.gst.gov.in)
• Navigate to Services > Returns > ITC Forms
• Select ITC-04

Enter Job Work Details

• Input details of goods sent to job workers
• Update records of goods received back
• Enter details of goods transferred to another job worker
• Mention goods directly supplied from job worker’s premises

Verify and Submit ITC-04

• Check all entries for accuracy
• Use Digital Signature Certificate (DSC) or Aadhaar-based OTP for submission
• Submit the form before the due date to avoid penalties
   

Benefits of Filing ITC-04

Ensures Smooth ITC Claims

• Proper filing allows businesses to claim full ITC on inputs and capital goods, reducing their tax burden.

Improves Supply Chain Transparency

• ITC-04 helps businesses track the movement of goods across different job work stages, preventing mismanagement.

Avoids Tax Liabilities on Job Work

• If goods are not returned within the stipulated period, they become taxable. Filing ITC-04 ensures compliance and tax savings.

Minimises Compliance Burden

• With annual filing options for small businesses, ITC-04 simplifies compliance while ensuring regulatory adherence.

Time Limits for Receiving Goods from Job Workers

To continue claiming ITC, businesses must ensure the return of goods within these timeframes:

If goods are not returned within this period, they are considered a deemed supply and become taxable.

Penalties for Non-Compliance with ITC-04

While there is no specific late fee, failure to file ITC-04 can result in penalties under Section 125 of the GST Act:

• Penalty of up to ₹25,000 for non-compliance.
• Demand for tax repayment if ITC is incorrectly claimed.
• Suspension of GST registration in severe cases.

Tips to Avoid Penalties:

• File ITC-04 before the due date (25th April or 25th October).
• Maintain accurate records of goods sent and received.
• Use GST-compliant software to automate filings.

Common Mistakes While Filing ITC-04 and How to Avoid Them

Incorrect GSTIN of Job Worker

• Cross-check GSTIN details before submission.

Mismatched Transaction Dates

• Ensure that dispatch and return dates are recorded accurately.

Failure to Track Goods Sent for Job Work

• Maintain a detailed ledger to track goods in real time.

Not Filing ITC-04 for Goods Sent Between Job Workers

• Report all inter-job worker transfers to avoid ITC issues.

Practical Example of ITC-04 Filing

ABC Manufacturing sends 1,000 metal rods to XYZ Job Works for polishing. After completion:

• 950 rods are returned within 12 months → ABC can claim ITC.
• 50 rods are damaged and not returned → ITC is not allowed on these 50 rods.
• ABC files ITC-04, reporting all movements to remain GST-compliant.

This example highlights why tracking goods and filing ITC-04 is essential for seamless ITC claims.
 

Conclusion

The GST ITC-04 Form plays a vital role in tracking goods sent for job work and ensuring seamless Input Tax Credit (ITC) claims. It helps businesses maintain transparency, optimise tax benefits, and comply with GST regulations. Filing ITC-04 on time prevents penalties and tax liabilities from deemed supplies while enhancing supply chain efficiency.

By keeping accurate records and automating compliance, businesses can simplify GST reporting, avoid discrepancies, and ensure uninterrupted ITC flow. Proper adherence to ITC-04 guidelines not only reduces tax burdens but also fosters better financial planning and operational efficiency.