Notification No. 87/2020 – Central Tax Explained

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Notification No. 87/2020 – Central Tax extends the due date for filing FORM GST ITC-04 for the quarter July to September 2020 from the existing deadline to 30th November 2020.
This was done to provide relief to taxpayers struggling with job work compliance during the pandemic.

Answer:
FORM GST ITC-04 is a quarterly return filed by a principal manufacturer to report:
Goods sent to job workers,
Goods received back from job workers, or
Goods supplied directly from the job worker’s premises.
It ensures proper tracking of Input Tax Credit (ITC) under Section 19 of the CGST Act, 2017.
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The notification applies to the quarter from July 2020 to September 2020.
The extended due date for filing FORM ITC-04 for this period is 30th November 2020.

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Any manufacturer or principal who sends goods to a job worker for processing, assembly, or repair must file FORM ITC-04.
This form tracks the movement of goods between the principal and job worker.

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The notification is issued under:
Section 168 of the CGST Act, 2017, empowering the Commissioner to issue directions.
Rule 45(3) of the CGST Rules, 2017, which mandates the filing of FORM ITC-04.

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Due to the COVID-19 pandemic, many manufacturing units and job workers faced:
Delays in goods movement,
Limited workforce availability,
Disruptions in accounting operations.
Hence, the government extended the deadline to allow sufficient time for accurate filing.

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Rule 45(3) specifies that every principal manufacturer must furnish FORM GST ITC-04 quarterly, detailing the goods sent to and received from job workers.
This ensures transparency in ITC utilization and prevents misuse of job work provisions.

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If a taxpayer fails to file FORM ITC-04 within the due date:
The department may question the continuation of ITC claims, and
It may result in ITC reversal as per Section 19(3) of the CGST Act, 2017.
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The form includes:
Details of goods sent to job workers,
Challans for goods dispatched or returned,
Goods supplied directly from job worker premises, and
Balance of goods lying with job workers.

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Although issued on 10th November 2020, the notification is deemed to have come into force from 25th October 2020, ensuring retrospective legal coverage.

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Beneficiaries include:
Manufacturers using job workers,
MSMEs relying on outsourced labor,
Job work-based industries such as textiles, jewelry, engineering, and chemicals.
🧵 Example:
A textile company sending fabric to a dyeing unit can now report the transaction by 30th November 2020 without penalty.

Answer:
Section 19 governs Input Tax Credit for job work transactions.
It states that:
The principal can claim ITC on inputs sent to a job worker.
The goods must be returned within 1 year (inputs) or 3 years (capital goods), failing which ITC may be reversed.

Answer:
✅ Smooth flow of Input Tax Credit (ITC)
✅ Avoidance of audit-related disputes
✅ Clear record of inventory movement
✅ Strengthened transparency in compliance
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Some frequent mistakes include:
Missing challan numbers,
Mismatched quantities between sent and received goods,
Late submission of returns, and
Incomplete job work reporting.
Finodha helps you avoid such errors through automated GST tracking.

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Taxpayers should:
Reconcile goods movement records.
Verify pending returns with job workers.
File ITC-04 by the extended date (30th Nov 2020).
Maintain challan-wise details for audit purposes.
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