Why job work needs its own module
Very few Indian factories do every process in-house. Plating, powder coating, heat treatment, printing, lamination, dyeing, machining and stitching are routinely sent outside to specialists. Each time material leaves the gate for job work, it remains the principal stock, it must move under proper GST documentation, and it must come back, as finished goods or as waste, within fixed time limits.
When job work is handled through ordinary sale and purchase entries or a register kept on the side, stock at vendors becomes a guess, challans go unreconciled and ITC-04 is prepared from memory at the end of the period. The job work module in DotOne treats subcontracting as a proper transaction type, linked to production, stores, purchase and accounts, so the material trail is complete from issue to receipt.
Subcontract orders and outward challans
Job work starts with a subcontract order to the job worker that states the process, the output item, the expected quantity and the agreed job charge. The order can be raised manually or generated from a production order where a routing operation is marked as outsourced, as described on our BOM management page.
Material is then sent against the order on a delivery challan. Under GST, goods sent for job work move without tax on a challan as provided under Rule 45 of the CGST Rules, and the challan carries the details the law requires, such as the description, quantity, value and the job worker details. Where an e-way bill is required, the challan data feeds it so it is not typed twice.
- Subcontract order with process, output item, rate and due date.
- Outward challan printed from the order with GST-required details.
- Partial dispatches and multiple challans against one order.
- Direct dispatch from your supplier to the job worker recorded against the order.
Stock at vendor location and BOM-based consumption
Every job worker is set up as a virtual stock location. Material sent on a challan moves into that location and stays visible in inventory reports as your stock held elsewhere, valued and aged. You can see at any time how much of each item is lying at each vendor and against which order.
When processed goods come back, the ERP uses the BOM or conversion ratio defined for that process to calculate how much input should have been consumed. If 100 kg of coil goes for slitting and 97 kg of strips returns, the system knows what the standard consumption was, what the allowed process loss is and whether the difference is within tolerance or needs to be explained.
Allowed process loss
Process loss percentages are defined per item or per process and agreed with each job worker. Losses within the allowance are consumed automatically; anything beyond it is flagged for review, recovery from the vendor or approval, so material does not quietly disappear at the job worker.
Receipts, rejections and scrap
Material returns from the job worker on their challan or invoice and is received against the subcontract order. Goods can pass through incoming inspection in the quality module before being accepted into stock, so rejected pieces are separated at the gate rather than discovered on the line.
- Accepted quantity moves to stores or the next production stage.
- Rejections due to job worker fault are recorded for rework or debit.
- Rejections due to input material defects are tracked separately.
- Scrap and waste returned or sold from the job worker premises are recorded against the order.
- Unprocessed material returned is moved back to your own stock.
Return time limits under GST
GST sets time limits for goods sent on job work. Inputs are generally expected back within one year and capital goods such as moulds, dies, jigs and fixtures within three years of being sent. If they do not return within the limit, the original dispatch is treated as a supply on which tax becomes payable. The exact conditions and any extensions should be confirmed with your tax advisor.
DotOne tracks the dispatch date on every challan line and shows what is approaching its deadline, by job worker and by item. Alerts give your team time to bring material back, regularise it or account for it properly, instead of finding an old open challan during an audit.
ITC-04 reporting
Principals who send goods for job work report those movements in Form ITC-04, covering goods sent, goods received back and goods sent onward from one job worker to another. Preparing it manually means matching months of challans with receipts, which is where most errors creep in.
Because every challan and receipt is already linked in the ERP, the ITC-04 data is generated directly from transactions, with the challan references, quantities and dates the return needs. Open balances by job worker reconcile with the stock-at-vendor report, so the return and the books always agree. This works alongside the accounting and GST module.
Job charges, billing and costing
The job worker bills for their service, and that invoice is booked against the subcontract order with the agreed rate. Quantity received, rate and invoice are matched, so you pay for what actually came back accepted. Debit notes for excess loss or job worker rejections are raised from the same order.
Job charges are added to the cost of the processed item along with any freight, so product cost reflects the real cost of outsourced stages. Comparing job charges and loss across vendors for the same process helps decide whom to give more work to. See our costing software page for how this flows into product cost.
Inward job work: when you are the job worker
Many manufacturers also do job work for others. In that case, the customer material you receive is not your stock and must be kept separate from it. DotOne records inward job work as customer-owned stock, tracks consumption against the customer BOM or ratio, and returns finished goods on a challan.
Your job charge invoice is raised against the inward order with GST applied on the service, and reports show customer material held, processed and pending return. This keeps your own stock valuation clean and gives your customers accurate statements of their material.
