Free GST Filing for Small Manufacturers: ITC, Job Work, ITC-04

You've just bought a ₹8 lakh CNC machine, sent a batch of parts out for plating, and the steel supplier has raised prices again. Manufacturing GST has more moving parts than trading GST: raw materials, capital goods, job workers, and sometimes a credit balance that never seems to get used. HelloBooks Free files GSTR-1 and GSTR-3B for one GSTIN, directly to the GST portal. It does not file ITC-04, the job work return, and we'll be clear below about which other forms you'll handle elsewhere.

The basics for a small factory

A manufacturer that supplies only goods must register at ₹40 lakh of aggregate turnover in most states, and earlier if it sells to another state. In practice most small manufacturers register from the start because their buyers are businesses.

Composition is open to manufacturers with turnover up to ₹1.5 crore, at 1% of turnover. A few product categories, like ice cream, pan masala and tobacco products, are excluded. It rarely suits a manufacturer selling to other businesses, because composition dealers can't pass on input credit or sell inter-state, and they lose all their own ITC on raw materials and machinery. HelloBooks doesn't file composition returns (CMP-08 and GSTR-4) in any case.

Most manufactured goods now sit at 5% or 18%, following the GST 2.0 changes on 22 Sep 2025, with 40% for a narrow set of goods. If you make something whose rate changed, update your item master and price lists. Your buyers' purchase teams will be checking.

ITC is how a factory keeps GST neutral

For a manufacturer, nearly every rupee of GST you pay on inputs should come back as credit:

Capital goods credit is a big deal for small units. A ₹8 lakh machine at 18% carries ₹1.44 lakh of GST. That's claimable in the month the invoice appears in your GSTR-2B, not spread over years. Just don't also claim depreciation on that GST portion in your income tax books.

Inverted duty: when credit piles up

Some manufacturers buy inputs at a higher rate than the finished product. After GST 2.0 cut many finished goods to 5% while some inputs stayed at 18%, this "inverted duty structure" became more common. The result is a credit ledger that keeps growing because your output tax is never big enough to use it.

The law allows a refund of accumulated ITC due to inverted duty under Section 54(3), using a formula and claimed on the GST portal in Form RFD-01. Input services and capital goods are left out of the formula. HelloBooks doesn't file refund applications. If your credit ledger keeps growing month after month, it's worth having a CA look at a refund claim.

Job work and the ITC-04 return

Small manufacturers often send goods out for a process like plating, heat treatment, stitching or machining. Under Section 143, you can send inputs or capital goods to a job worker without paying GST on that movement, as long as they come back in time:

• Inputs: within 1 year
• Capital goods (moulds, dies, jigs): within 3 years

If they don't come back in time, the original dispatch is treated as a supply on the day you sent them, and GST becomes payable with interest.

To track all this, the principal manufacturer files Form GST ITC-04, which reports goods sent to and received from job workers. The current frequency is:

So for FY 2026-27, a small unit's ITC-04 is due by 25 Apr 2027.

ITC-04 is not on HelloBooks Free. You'll file it on the GST portal yourself or through your CA. What HelloBooks does help with is keeping your purchase bills, job worker invoices and sales in one set of books, so the data you need for ITC-04 is easy to pull together.

Job work movements often need e-way bills, and inter-state job work movements have their own rules on when one is needed. Check the rule for your situation.

Worked example: Patel Precision Components, Rajkot

Kiran Patel makes machined auto components at 18% and sells mostly to buyers in Gujarat and Maharashtra. Here's Nov 2026 (illustrative):

ITC of ₹2,93,400 is more than output tax of ₹2,88,000. So this month Kiran pays nil cash GST and carries about ₹5,400 forward. Without the machine, he'd have paid around ₹1.39 lakh. One capital purchase can swing a month's cash tax completely, which is why it's worth timing big purchases and checking that the supplier files on time.

The plating batch he sent out in Nov 2026 needs to come back within a year. It'll also go into his annual ITC-04 for FY 2026-27.

GSTR-1 is due 11 Dec 2026 and GSTR-3B 20 Dec 2026.

What HelloBooks covers, and what it doesn't

Let's be practical. A manufacturer shipping goods worth over ₹50,000 per consignment needs e-way bills almost every time. So unless you generate them yourself on the e-way bill portal, Pro is the realistic plan for most factories. Free fits a very small unit with a handful of large invoices a month, or a manufacturer who wants to see GST filing working before moving everything over. If you're crossing ₹5 crore, you'll also need e-invoicing, which is in Pro. Tally sync is in Pro too, if your CA still works in Tally. See pricing.

How HelloBooks helps

HelloBooks files GSTR-1 and GSTR-3B directly to the GST portal from inside the app. GSTR-2B reconciliation catches a missing machine invoice before you file. Before you file GSTR-3B, you see the GST portal's own interest and late-fee figure. AP aging keeps suppliers within the 180-day payment window that protects your ITC. Bank statement import matches payments against bills. And your CA can work in the same books.

FAQs

Can I claim GST on a new machine in one go?

Yes. ITC on capital goods is available in full when the invoice appears in your GSTR-2B, as long as you don't also claim depreciation on the GST portion.

Does HelloBooks file ITC-04?

No. ITC-04 isn't part of HelloBooks Free. File it on the GST portal yourself or through your CA.

What happens if goods sent to a job worker don't come back in time?

If inputs aren't back within 1 year (or capital goods within 3 years), the original dispatch is treated as a supply, and GST is payable with interest.

My credit ledger keeps growing. What can I do?

If it's because inputs are taxed higher than your product, you may be eligible for an inverted duty refund under Section 54(3). A CA can assess and file it.

Should a small manufacturer choose composition?

Rarely, if you sell to businesses. You'd lose ITC on raw materials and machinery and couldn't sell inter-state.

Keep your job work register up to date month by month, and ITC-04 becomes a copy-paste job each year instead of a scramble.

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