The GST Council has recently made significant changes in the GST rates applicable to the job work sector, which directly impacts industries such as umbrellas, printing, pharmaceuticals, leather, and more. These changes aim to simplify compliance, reduce tax burdens in certain segments, and streamline the taxation structure.
1. Umbrella Manufacturing (Job Work Services)
Earlier Rate: 12% with Input Tax Credit (ITC)
New Rate: 5% with ITC
Impact: This will reduce costs for umbrella manufacturers, especially during the monsoon season when demand is high. Lower GST will help small-scale job workers and companies manage production more affordably.
2. Printing of Goods under Chapter 48 & 49
(Items like books, pamphlets, brochures, packaging materials, etc.)
Earlier Rate: 12% with ITC
New Rate: 5% with ITC
Impact: Printing businesses will now enjoy reduced tax liability, making printing services more cost-effective for publishers, advertisers, and packaging industries.
3. Job Work for Bricks (5% GST items)
Earlier Rate: 12% with ITC
New Rate: 5% with ITC
Impact: The construction sector, especially brick manufacturers, will benefit from lower costs on outsourced work. This will make raw materials more affordable and may indirectly reduce construction costs.
4. Pharmaceutical Products (Chapter 30)
Earlier Rate: 12% with ITC
New Rate: 5% with ITC
Impact: The pharmaceutical sector will see reduced costs in drug processing and formulation services. This change is expected to support India’s pharma exports and make medicines more affordable
5. Leather, Hides, and Skins (Chapter 41)
Earlier Rate: 12% with ITC
New Rate: 5% with ITC
Impact: Leather goods and tanning industries will save significantly on job work costs. This is positive news for footwear and leather exports, where India has a strong global presence.
Residual Entry (Other Job Work Not Covered Above)
Earlier Rate: 12% with ITC
New Rate: 18% with ITC
Impact: For job work services not specifically listed in the above categories, the rate has been increased to 18%. This means industries outside the given list may face higher costs for outsourced work.
Relief for Key Sectors: Umbrella, printing, pharmaceuticals, leather, and brick industries benefit from reduced GST (12% → 5%).
Boost to Exports & MSMEs: Lower rates will support MSMEs engaged in these industries, making Indian products more competitive globally.
Cost Reduction for Consumers: Lower job work costs may translate into reduced product prices in sectors like books, medicines, footwear, and construction.
Mixed Impact: While specific industries enjoy relief, the residual category faces higher costs with the jump to 18%.
The GST Council’s decision reflects a balanced approach—providing relief to essential and labor-intensive industries while tightening tax rates for unclassified job work services. Businesses in umbrellas, printing, bricks, pharma, and leather sectors will directly benefit, while others may need to reassess their cost structures under the new 18% slab.