jobwork

Job work is a service arrangement in which the principal, who owns the goods, contracts a separate entity—the job worker—to perform specific processing, transformation, or assembly operations on the goods. The principal provides inputs such as raw materials, semi-finished items, or designs, and the job worker carries out the agreed operations, which can include treatment, processing, assembling, finishing, labeling, packaging, testing, or other processes. After the work is completed, the processed goods are returned to the principal, who retains ownership and bears the risks and rewards associated with the goods’ subsequent use or sale. The job worker is compensated for the services rendered, typically through a charge for processing or a fee per unit.

The arrangement is usually governed by a contract that specifies scope, quality, turnaround times, and pricing. It is used to access specialized capabilities, manage capacity, and optimize costs and inventory without transferring ownership of the goods during processing. The principal generally remains responsible for procurement, movement of inputs, and final product liability, while the job worker provides the processing or manufacturing capacity.

Legal and regulatory treatment varies by jurisdiction. In many systems, job work is treated as a service involving the movement of goods, with tax and credit rules that determine invoicing, material handling, and any input credits or refunds. Common industries for job work include textiles and garment finishing, leather processing, metal finishing and plating, electronics assembly, printing, and packaging.