Raising Sales Invoice for the Job Work Out and Purchase Bill for Job Work In

In industries where manufacturing and processing are outsourced, Job Work plays a pivotal role. Whether you're a principal manufacturer sending raw materials to a job worker, or a job worker rendering services, maintaining accurate and compliant records—especially invoices and purchase bills—is crucial. In this blog, we break down how to correctly raise a Sales Invoice for Job Work Out and create a Purchase Bill for Job Work In in line with accounting practices and GST norms in India.

🔧 What is Job Work?

Job Work refers to processing or working on goods supplied by a principal manufacturer. The party performing the processing is called the job worker. The principal retains ownership of the goods.

For example:

• A textile company (Principal) sends fabric to a stitching unit (Job Worker) for tailoring.
• A metal company sends raw castings to a polishing unit for surface finishing.

🧾 Sales Invoice for Job Work Out

This is issued by the job worker to the principal for the services rendered (not for the goods, as ownership remains with the principal).

✅ Key Components of the Sales Invoice:

1. Invoice Number & Date
2. Details of the Principal (Customer)
3. Description of Job Work Performed
   • Nature of service (e.g., cutting, machining, assembling)
   • Quantity of goods processed
4. Service Charges
5. GST (if applicable)
   • SAC Code
   • GST % based on the nature of service
6. Total Invoice Value
7. Place of Supply & GSTIN

📌 Note: Since goods belong to the principal, the invoice does not mention the value of materials, only the job work service charges.

📥 Purchase Bill for Job Work In

This is created by the principal when receiving an invoice from the job worker for services rendered.

✅ What to Include in the Purchase Entry:

1. Job Worker's Invoice Reference
2. Service Description
3. Amount Charged for Job Work
4. GST Breakup
5. Ledger Posting
   • Debit: Job Work Charges A/c (or similar expense head)
   • Credit: Job Worker / Payables A/c

📘 If Input Tax Credit (ITC) is eligible, the principal can claim ITC on the GST component.

🔁 Flow of Job Work Transaction (Simplified)

1. Principal sends goods to job worker (under delivery challan, no sale).
2. Job worker performs the job and sends back processed goods.
3. Job worker raises a Sales Invoice for the service charges.
4. Principal records a Purchase Bill for the job work expense.

🧮 GST Compliance Tips

• Use proper SAC codes for job work services (e.g., SAC 9988 for manufacturing services).
• Ensure delivery challan accompanies goods sent for job work.
• Maintain a Job Work Register to track material movement and turnaround time.
• Time limit for returning processed goods: 1 year for inputs, 3 years for capital goods (as per GST rules).

👨‍💼 Real-World Example

Let’s say ABC Ltd. sends 1,000 metal components to XYZ Works for powder coating. XYZ charges ₹5 per piece and applies 18% GST.

• XYZ Issues Invoice:
  • Description: Powder Coating of 1,000 components
  • Amount: ₹5,000
  • GST @18%: ₹900
  • Total: ₹5,900
• ABC Records Purchase Bill:
  • Expense Account: Job Work Charges ₹5,000
  • GST ITC: ₹900
  • Total Payable to XYZ: ₹5,900

🧾 Summary