GST ITC-04 Filing (FY 2026-27) for MSMEs: Process, Benefits, Exemptions and Penalties
TL;DR: GST Form ITC-04 tracks goods sent to and received from job workers. For FY 2026-27, half-yearly filers (turnover above ₹5 crore) file by 25 October 2026 and 25 April 2027; yearly filers (up to ₹5 crore) file by 25 April 2027. Missing it risks a ₹25,000 penalty and 18% interest on reversed ITC.
GST ITC-04 Filing: Every GST-registered business that sends goods to a job worker for cutting, assembly, or finishing must file GST Form ITC-04, and missing the FY 2026-27 deadline can trigger a ₹25,000 penalty plus 18% interest on reversed ITC. This guide breaks down the exact due dates by turnover slab, the five-step filing process, required documents, exemptions, and what GST 2.0 has changed. It is built for MSME manufacturers, traders, and finance teams managing job work.
GST ITC-04 Filing (FY 2026-27) Important Aspects
Mentioned here is some of the crucial information for filing GST ITC-04 for the year 2026-27. Check the table below for complete details:
| Filing Category | Detail |
|---|---|
| Half-yearly due dates (turnover above ₹5 crore) | 25 October 2026 (Apr–Sep 2026) and 25 April 2027 (Oct 2026–Mar 2027) |
| Annual due date (turnover up to ₹5 crore) | 25 April 2027 for FY 2026-27 |
| Turnover threshold for frequency | ₹5 crore (Rule 45(3), Notification No. 38/2019–Central Tax) |
| Time limit to return goods | 12 months for inputs, 3 years for capital goods (Section 143, CGST Act) |
| Penalty for non-filing / incorrect filing | Up to ₹25,000 under Section 125 of the CGST Act |
| Interest on reversed ITC | 18% per annum |
| Authentication for submission | Digital Signature Certificate (DSC) or Aadhaar-based OTP |
| Core documents needed | Rule 55 delivery challans, job worker GSTIN, HSN codes and quantities, dispatch/return dates |
| Late fee for ITC-04 itself | None specified, but downstream GSTR-2B/3B mismatches can block other return filing |
What Is GST Form ITC-04?
GST Form ITC-04 is a periodic return filed by a principal manufacturer, or supplier, to report the movement of goods sent to job workers and received back. It enables the GST system to track raw materials and semi-finished goods leaving a registered premises for third-party processing, ensuring no ITC is wrongly claimed or lost.
Legal Basis Under Section 143
Under Section 143 of the CGST Act, 2017, a “principal” retains legal ownership of goods even while they sit at a job worker’s premises. ITC-04 is the compliance mechanism that records this movement for GST purposes. Without accurate filing, a business risks ITC disallowance on inputs sent for job work, directly increasing its effective tax outflow.
Scale of the MSME Job Work Segment
According to the Ministry of MSME, over 7.83 crore enterprises are now registered on the Udyam Registration Portal, and this number continues to grow. A significant share of manufacturing MSMEs among them rely on outsourced job work for cutting, stitching, machining, and finishing, which makes ITC-04 a recurring, not one-off, compliance task.
What’s New for ITC-04 in FY 2026-27?
The ITC-04 form, turnover thresholds, and due dates are unchanged for FY 2026-27, but the compliance environment around filing has tightened. GST 2.0 reforms simplified rate slabs and automated refunds from September 2025 onward, while the GST portal now runs stricter cross-checks that can penalise unreconciled job work data even though ITC-04 itself carries no late fee.
GST 2.0 and Rate Simplification
GST 2.0, rolled out from September 2025, moved most goods into a simplified two-slab structure of 5% and 18%, and phased out the compensation cess by March 2026. This does not change how ITC-04 is filed, but it does change the tax rate applied to job work inputs and outputs in many sectors, so principals should re-check HSN-wise rates before their next filing.
Stricter GSTR-2B and GSTR-3B Validation
The GST portal introduced hard validation checks between GSTR-2B and GSTR-3B during 2026, meaning a mismatch between these returns can block further return filing until corrected. ITC-04 movements that are not reconciled with purchase and sales records can contribute to such mismatches, making disciplined job work record-keeping more important than before.
CGTMSE-Backed Invoice Discounting on TReDS
Budget 2026-27 introduced CGTMSE-backed credit guarantee support for invoice discounting on the TReDS platform, alongside a mandate making TReDS the settlement platform for CPSE purchases from MSMEs. This gives job-work-dependent MSMEs an additional, guarantee-backed route to unlock cash from receivables while their GST compliance record, including ITC-04, is being built.
Read more about: 10 Types of Services Under GST and Their Implications
Who Must File ITC-04?
Any GST-registered business that sends goods to a job worker for processing, assembly, testing, or any value-addition activity must file ITC-04, regardless of business size. Filing frequency, not the obligation itself, changes with annual turnover.
Categories of Filers
- Manufacturing businesses that outsource part of their production process
- Principal suppliers who send inputs to third-party processors
- Businesses where job workers further send goods to another sub-contractor before returning them to the principal
Filing Frequency and FY 2026-27 Due Dates
Filing frequency depends on annual aggregate turnover (AATO) in the preceding financial year, under Rule 45(3) of the CGST Rules, introduced via Notification No. 38/2019–Central Tax. Businesses above ₹5 crore file half-yearly; businesses at or below ₹5 crore file yearly.
| Annual Turnover | Filing Frequency | FY 2026-27 Due Dates |
|---|---|---|
| Above ₹5 crore | Half-yearly (Apr–Sep and Oct–Mar) | 25 October 2026 / 25 April 2027 |
| Up to ₹5 crore | Yearly | 25 April 2027 (for FY 2026-27) |
How Does ITC-04 Filing Work?
ITC-04 filing follows a five-step data entry process on the GST portal: collecting transaction data, compiling it in a structured format, accessing the portal, filling in Table 4 and Table 5, and verifying with a digital signature or Aadhaar OTP before submission.
Step 1: Collect Transaction Data
Before logging in, gather the GSTIN of all job workers, HSN codes and descriptions of goods sent, quantities dispatched and received back, and the dates of dispatch and return.
Step 2: Compile Records in GST-Compatible Format
Use GST-compliant accounting software or a structured Excel template. Discrepancies in quantity or dates remain the most common reason for ITC-04 rejection or notices in 2026.
Step 3: Access the GST Portal
Log in at www.gst.gov.in. Navigate to: Services → Returns → ITC Forms → ITC-04.
Step 4: Fill In the Form
Enter the job worker’s GSTIN, goods description, transaction dates, and movement details. The form has two tables — Table 4 (goods sent from principal to job worker) and Table 5 (goods received back, or sent directly from the job worker to a buyer).
Step 5: Verify and Submit
Authenticate using a Digital Signature Certificate (DSC) or Aadhaar-based OTP. Once submitted, the filing is final for that period; corrections must be made in the subsequent filing period.
A Practical Example
A garment manufacturer in Tirupur sends 2,000 metres of fabric to a stitching unit under a Rule 55 job-work challan. When the finished units are returned, the manufacturer must record the full movement — quantity sent, quantity returned, and scrap quantity — in ITC-04. If 50 metres are scrapped, the ITC on those inputs must be reversed.
What Are the Benefits of Filing ITC-04 Accurately?
Accurate ITC-04 filing protects input tax credit, improves visibility into goods sitting at job worker locations, and reduces exposure to penalties and GST notices. These three benefits compound over time as job work volumes grow.
Protects Input Tax Credit
ITC on goods sent for job work is claimable by the principal only if the goods are returned within 12 months for inputs, or 3 years for capital goods. ITC-04 is the documentary evidence for this. Lapses in filing create audit exposure.
Improves Supply Chain Visibility
Regular filing forces systematic tracking of goods across job worker locations. Businesses with multiple job workers, common in auto-ancillary, textile, and engineering sectors, gain an accurate inventory position across their supply chain.
Reduces Penalty and Notice Risk
Under Section 125 of the CGST Act, incorrect or non-filing of ITC-04 can attract a penalty of up to ₹25,000. Accurate filing eliminates this exposure entirely.
How Does ITC-04 Differ From Other GST Returns?
ITC-04 tracks the physical movement of goods sent for job work, while GSTR-1 reports outward sales invoices and GSTR-3B summarises overall tax liability. All three are separate filings and none can substitute for another.
| Aspect | ITC-04 | GSTR-1 | GSTR-3B |
|---|---|---|---|
| Purpose | Track goods sent for job work | Report outward supplies | Summary of tax liability |
| Filing frequency | Half-yearly / Yearly | Monthly / Quarterly | Monthly |
| Applicable to | Principals with job work activity | All registered taxpayers | All registered taxpayers |
| Key data | Goods movement, job worker GSTIN | Invoice-wise sales data | Summary of sales and purchases |
| ITC impact | Directly protects ITC on job work inputs | Affects tax liability | Determines final tax payable, hard-validated against GSTR-2B |
MSMEs sometimes confuse ITC-04 with GSTR-1 because both involve goods movement data. They serve entirely separate compliance functions and cannot substitute for each other.
What Are the Penalties for Not Filing ITC-04?
There is no specific late fee for ITC-04, but non-filing or incorrect filing can attract a general penalty of up to ₹25,000 under Section 125 of the CGST Act, along with ITC reversal and 18% annual interest on wrongly availed credit.
Downstream Consequences Beyond the Direct Penalty
- Demand notices for ITC reversal with interest, currently 18% per annum on wrongly availed credit
- Risk of GST registration suspension in cases of persistent non-compliance
- Disallowance of ITC on inputs sent for job work, increasing effective tax cost
For an MSME with ₹2 crore in annual job work inputs carrying 18% GST, that is ₹36 lakh in potential ITC exposure if records are not maintained and filed correctly.
What Are the Key Exemptions Under ITC-04?
Not all job work scenarios require ITC-04 filing. Goods used exclusively for exempt supplies, goods damaged or destroyed at the job worker’s premises, and goods not returned within the prescribed time limit are excluded, though ITC reversal still applies in most of these cases.
- Goods used exclusively for exempt or non-taxable supplies
- Goods that are damaged or destroyed at the job worker’s premises, where ITC must be reversed
- Goods not returned within 12 months for inputs, or 3 years for capital goods — these are treated as a deemed supply, and ITC must be reversed rather than claimed
Businesses should note that the 12-month clock starts from the date of sending the goods, not from the filing date.
How Does Working Capital Finance Connect to GST Compliance?
Sound GST compliance, including ITC-04, directly strengthens a business’s creditworthiness because lenders increasingly review GST return history as a proxy for financial discipline when evaluating MSME working capital loan applications. Consistent, accurate filings can support faster, better-informed credit decisions.
Oxyzo’s Role for Job-Work MSMEs
Oxyzo, an RBI-registered NBFC and part of the OfBusiness Group, provides working capital loans and invoice discounting to Indian MSMEs. Oxyzo’s credit evaluation process is digital-first and assessment-based, which means a clean GST compliance track record, including ITC-04 where applicable, can support faster credit decisions.
Oxyzo offers fast-track disbursement for eligible applicants, subject to credit assessment at the time of application. With Budget 2026-27’s CGTMSE-backed guarantee support for invoice discounting on TReDS, job-work-heavy MSMEs now have an additional route to unlock cash from receivables while their compliance profile is being built. For MSMEs whose cash flow is disrupted by delayed ITC refunds or compliance processing times, working capital finance can bridge the gap while the GST system processes claims.
Conclusion
GST Form ITC-04 is a compliance requirement that directly affects the input tax credit position, and therefore the working capital efficiency, of every MSME engaged in job work. Filing accurately and on time protects ITC claims, reduces penalty exposure, and builds a stronger compliance profile that supports credit access. MSMEs should build ITC-04 into their FY 2026-27 GST compliance calendar alongside GSTR-1 and GSTR-3B.
GST ITC-04 Filing FAQs
Is ITC-04 mandatory for all businesses that use job workers?
Yes, any GST-registered principal that sends goods to job workers for processing must file ITC-04. Filing frequency depends on annual turnover — half-yearly for businesses above ₹5 crore, and yearly for those at or below ₹5 crore, per Rule 45(3) of the CGST Rules.
What happens if goods sent for job work are not returned within 12 months?
If inputs are not returned within 12 months of the date of dispatch, they are treated as a deemed supply by the principal. The ITC originally claimed that those inputs must be reversed in the next filing period, along with applicable interest.
Can errors in a filed ITC-04 be corrected?
Yes. There is no amendment mechanism within the same period, but corrections can be made in the immediately subsequent filing period. Businesses should reconcile records before each filing to avoid this situation.
What documents are required for ITC-04 filing?
The key documents are: delivery challans for goods dispatched under Rule 55, GSTIN details of all job workers, HSN codes and quantities of goods, and records of goods received back. GST-compliant accounting software can automate much of this data compilation.
What is the penalty for late or incorrect ITC-04 filing?
Under Section 125 of the CGST Act, a general penalty of up to ₹25,000 applies. Additionally, wrongly availed ITC may attract demand notices with interest at 18% per annum.
Has GST 2.0 changed the ITC-04 filing process?
No. GST 2.0 reforms simplified GST rate slabs and automated refunds, but the ITC-04 form, turnover thresholds, and due dates for FY 2026-27 remain the same. Reconciliation discipline matters more now due to stricter GSTR-2B/3B validation.
Udayaditya Dwivedi brings over eight years of industry experience and writes about SME finance, digital lending, working capital, and technology-led financial solutions. His work simplifies complex financial concepts for entrepreneurs and business decision-makers. He is an alumnus of FMS Delhi.