TRANSITIONAL PROVISIONSCentral
Section 19 of The Union Territory Goods and Services Tax Act, 2017
- (1)Where any inputs received at a place of business had been dispatched as such or dispatched after being partially processed to a job worker for further processing, testing, repair, reconditioning or any other purpose in accordance with the provisions of existing law prior to the appointed day and such inputs are returned to the said place on or after the appointed day, no tax shall be payable if such inputs, after completion of the job work or otherwise, are returned to the said place within six months from the appointed day: Provided that the period of six months may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding two months: Provided further that if such inputs are not returned within a period of six months or the extended period from the appointed day, the input tax credit shall be liable to be recovered in accordance with the provisions of clause (a) of sub-section (8) of section 142 of the Central Goods and Services Tax Act.
- (2)Where any semi-finished goods had been despatched from any place of business to any other premises for carrying out certain manufacturing processes in accordance with the provisions of existing law prior to the appointed day and such goods (hereinafter in this section referred to as “the said goods”) are returned to the said place on or after the appointed day, no tax shall be payable if the said goods, after undergoing manufacturing processes or otherwise, are returned to the said place within six months from the appointed day: Provided that the period of six months may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding two months: Provided further that if the said goods are not returned within a period specified in this sub-section, the input tax credit shall be liable to be recovered in accordance with the provisions of clause (a) of sub-section (8) of section 142 of the Central Goods and Services Tax Act: Provided also that the person despatching the goods may, in accordance with the provisions of the existing law, transfer the said goods to the premises of any registered person for the purpose of supplying therefrom on payment of tax in India or without payment of tax for exports within six months or the extended period, as the case may be, from the appointed day.
- (3)Where any goods had been despatched from the place of business without payment of tax for carrying out tests or any other process to any other premises, whether registered or not, in accordance with the provisions of existing law prior to the appointed day and such goods are returned to the said place of business on or after the appointed day, no tax shall be payable if the said goods, after undergoing tests or any other process, are returned to such place within six months from the appointed day: Provided that the period of six months may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding two months: Provided further that if the said goods are not returned within the period specified in this sub-section, the input tax credit shall be liable to be recovered in accordance with the provisions of clause (a) of sub-section (8) of section 142 of the Central Goods and Services Tax Act: Provided also that the person despatching the goods may, in accordance with the provisions of the existing law, transfer the said goods from the said other premises on payment of tax in India or without payment of tax for exports within six months or the extended period, as the case may be, from the appointed day.
- (4)The tax under sub-sections (1), (2) and (3) shall not be payable only if the person despatching the goods and the job worker declare the details of the inputs or goods held in stock by the job worker on behalf of the said person on the appointed day in such form and manner and within such time as may be prescribed.
Summary
- Inputs sent to a job worker (an outside facility hired to process or repair materials) before the new tax law starts can be returned without paying tax if they are brought back within six months.
- Semi-finished goods sent out for manufacturing processes enjoy the same tax-free return rule if returned within six months.
- The Commissioner has the power to extend this six month deadline by an additional period of up to two months.
- If the goods are not returned within the allowed time, the input tax credit will be recovered from the person who sent them.
- Both the sender and the job worker must declare the details of the stock held on the appointed day to qualify for this benefit.
Practical examples
1On May 1, 2026, a furniture maker named Arun sends raw wood to a job worker to be carved. The new tax law begins July 1. As long as the carved wood is returned to Arun by January 1, 2027 (six months later), no tax is charged on the movement.
2A garment business sends fabric out for dyeing, but a flood delays the return past the six month deadline. The business owner successfully petitions the Commissioner for a two month extension to avoid having their tax credit recovered.
FAQ
1. How long do you have to return goods from a job worker without paying tax?
The goods must be returned within six months from the appointed day.
2. Can this time limit be extended?
Yes, the Commissioner can extend the period for a further period not exceeding two months if sufficient cause is shown.
3. What happens if the goods are not returned in time?
The input tax credit shall be liable to be recovered in accordance with the Central Goods and Services Tax Act.
4. Do businesses need to report the goods currently at a job worker?
Yes, the person dispatching the goods and the job worker must declare the details of the goods held in stock on the appointed day.
Test yourself
Q1.Under Section 19 of The Union Territory Goods and Services Tax Act, 2017, what is the standard time limit for goods to be returned from a job worker to avoid tax liability?
Q2.Under Section 19 of The Union Territory Goods and Services Tax Act, 2017, who holds the authority to extend the time limit for returning goods from a job worker?
Q3.Under Section 19 of The Union Territory Goods and Services Tax Act, 2017, what is the maximum duration of the extension that can be granted for returning goods from a job worker?
Q4.Under Section 19 of The Union Territory Goods and Services Tax Act, 2017, what is a strict requirement for a business to avoid paying tax on goods held by a job worker on the appointed day?