If you run an embroidery unit that works on fabric or garments supplied by garment manufacturers, textile exporters, or other businesses, you are likely operating as a “job worker” under GST law. The job work framework under GST has specific rules — about tax rates, delivery challans, time limits, and compliance — that every embroidery unit must understand to avoid expensive mistakes.
In this detailed guide, we explain everything about GST for job work in embroidery units in simple language. We cover the meaning of job work, the applicable tax rate, HSN codes, delivery challan requirements, ITC rules, time limits, and what happens when rules are not followed. By the end, you will have complete clarity on how job work GST applies to your embroidery business in 2026.
What Is Job Work Under GST?
Under Section 2(68) of the CGST Act, “job work” means any treatment or process undertaken by a person on goods belonging to another registered person. The person who owns the goods is called the “principal.” The person who performs the process is the “job worker.” For an embroidery unit, this means: if a garment manufacturer (the principal) sends you cut pieces or grey fabric and you do embroidery on it and return it, this is job work. The fabric belongs to the manufacturer, not to you. You are providing a processing service.
This is fundamentally different from buying fabric, doing embroidery, and selling the finished embroidered fabric — which is a sale of goods, not job work. The distinction is critical because the GST rate and invoicing rules are completely different for the two scenarios.
GST Rate for Embroidery Job Work
Job work services for textile and textile products (which includes embroidery, dyeing, printing, cutting, and all other processing services for goods falling under Chapters 50 to 63 of the HSN schedule) are taxed at 5% GST. This is classified under HSN code 9988 — “Manufacturing services on physical inputs (goods) owned by others.”
The 5% rate applies specifically to job work on textile goods (Chapters 50–63). If you were to perform job work on non-textile goods, a different rate of 12% would apply. Therefore, confirming that your work qualifies as textile job work is important for applying the correct rate. Since embroidery is always performed on textile materials (fabric, garments, accessories), the 5% rate applies universally to embroidery job work in India.
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Job Work Invoice Format for Embroidery Units
When you complete embroidery job work and return the processed goods to your principal, you must issue a tax invoice. Here is what your job work invoice must include.
| Invoice Field | What to Write |
|---|---|
| Invoice number and date | Sequential number, date of return of goods |
| Your GSTIN | Your 15-digit GSTIN as job worker |
| Principal’s GSTIN | The garment manufacturer or client’s GSTIN |
| Description of service | “Embroidery job work charges on [fabric/garment type]” |
| HSN Code | 9988 |
| Quantity processed | In pieces, meters, or kg as applicable |
| Job work charge per unit | Your agreed rate per piece / meter |
| Taxable value | Total job work charges (before GST) |
| GST rate | 5% (CGST 2.5% + SGST 2.5% or IGST 5%) |
| Total invoice amount | Job work charges + 5% GST |
| Reference to delivery challan | Original challan number under which goods were received |
Delivery Challan Rules for Job Work
Under GST, when a principal (your client) sends goods to you for job work, they must accompany the goods with a delivery challan — not a tax invoice. The delivery challan documents the goods being sent to you for processing without transfer of ownership. Here is what the delivery challan from your principal must include: challan number and date, their GSTIN and your GSTIN, description of goods (fabric type, colour, quantity), purpose of sending (embroidery job work), and address of delivery.
As a job worker, you should keep a record of every delivery challan received from each principal. Also, when you return the processed goods, you send a delivery challan back with the finished goods, accompanied by your job work invoice. Maintaining this paper trail is essential for your compliance and for the principal’s ITC records.
Time Limits for Returning Goods After Job Work
One of the most important rules of the job work framework is the time limit for returning processed goods. Under Section 143 of the CGST Act, goods sent to a job worker must be returned to the principal within the following time limits.
For inputs (raw materials, fabric, cut pieces) sent for job work: the goods must be returned within 1 year from the date of receipt by the job worker. For capital goods sent to the job worker: the goods must be returned within 3 years from the date of receipt. If goods are not returned within these time limits, they are treated as “deemed supply” — meaning the principal is deemed to have supplied goods to you and must pay GST on that deemed supply. Also, as a job worker, you may face complications in your own compliance records.
For embroidery units, this time limit is very relevant because some clients send large batches of fabric for seasonal collections that may take months to complete. Always monitor the date of receipt on each delivery challan and ensure goods are returned well within the 1-year limit. Communicate proactively with your client if any batch is at risk of exceeding this limit.
ITC Rules for Embroidery Job Workers
As a GST-registered embroidery job worker, you can claim ITC on your own inputs — embroidery threads, needles, machine spare parts, electricity (for eligible categories), and business-related purchases. You charge 5% GST to your clients on your job work services. The ITC you collect from your input purchases offsets this output tax, reducing your net payment to the government.
Importantly, you do NOT charge GST or pay GST on the value of the fabric itself — because the fabric belongs to your principal, not to you. You only charge GST on the job work service fee (your embroidery charges). The principal handles the GST on the goods separately. This is a key distinction that many new job workers get confused about.
GST Registration for Embroidery Job Workers
GST registration is mandatory for embroidery job workers if their annual aggregate turnover (total job work charges billed in a year) exceeds ₹20 lakh. If you provide inter-state job work services — for example, your embroidery unit is in Gujarat and your principal is in Maharashtra — registration is mandatory regardless of turnover. Also, many large garment manufacturers refuse to work with unregistered job workers because they cannot claim ITC on unregistered job work. Therefore, voluntary registration makes strong business sense for any growing embroidery unit.
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Frequently Asked Questions (FAQs)
1. If my client is unregistered, can I still do job work for them?
The GST job work framework under Section 143 of the CGST Act specifically refers to a “registered principal.” If your client is not GST registered, the special job work provisions do not apply. In this case, you provide a regular service to an unregistered person. You charge GST on your service at the applicable rate, and the unregistered client cannot claim ITC since they are not registered. This is a straightforward taxable supply of service.
2. Does the 1-year time limit for returning goods apply from when the principal sends the goods or when I receive them?
The 1-year period is calculated from the date the goods are received by the job worker — which is the date on the delivery challan when the goods actually arrive at your unit. Therefore, it is very important to date and record every delivery challan accurately on the actual receipt date, not the dispatch date. If you are maintaining a register of delivery challans, check it regularly to ensure no batch is approaching the 1-year limit.
3. Can a principal claim ITC on goods sent to my embroidery unit for job work?
Yes. Under Section 143(1) of the CGST Act, the principal can claim ITC on inputs and capital goods sent to a job worker for job work. The principal does not have to pay GST when sending goods to a registered job worker. Also, the principal can claim ITC on the 5% job work fee they pay you by including your invoice in their GSTR-3B. This is one of the most significant benefits of the job work framework for manufacturers.
4. Do I need to maintain a stock register of goods received for job work?
Yes. As a job worker, you are required to maintain a register or account of goods received for job work and goods returned after processing. This register should show: the delivery challan number, date of receipt, the principal’s name and GSTIN, description and quantity of goods received, and date of return. Also, any wastage or rejection during processing should be documented. This register is a key document if your compliance is ever reviewed or audited.
5. What if some fabric is wasted or damaged during embroidery — how is that handled under GST?
Normal wastage during job work is generally acceptable and does not attract GST separately. However, abnormal loss or damage to goods belonging to the principal is a more complex situation. You should inform the principal immediately and document the loss. If the principal chooses to write off the goods, they may need to reverse the ITC claimed on those goods. Also, as the job worker, you may face a claim for the value of damaged goods. Having a written job work agreement that specifies wastage norms and liability for damages protects both parties.
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