Engineering
Fabrication, machining, special-purpose machines, pumps, valves, heat treatment and plating. From our Nashik office we work on GST for job work, advances and retention, and on costing and bank finance for these units.
Last reviewed 1 October 2026
Engineering units in Nashik make parts and machines for larger plants and carry out process work for them. Fabricators, machine shops, pump and valve makers, heat-treatment and plating houses operate beside special-purpose machine builders. Job work is routine, milestone billing is frequent, and retention money may be held long after dispatch.
The tax and finance problems usually originate on the shop floor. Material is sent to a process house without a tracked challan; consumption departs from the bill of materials; the bank, the books and the GST returns count stock differently. This page describes the issues we meet most often and the way we work on them. Types of work are described; no clients are named.
The issues engineering businesses face
Engineering in Satpur, Ambad and Sinnar covers fabrication, special-purpose machines, pumps and valves, with heat treatment, plating and general machining carried on beside them. A large part of the work is job work for bigger plants. Small differences in the challan trail or the billing schedule accumulate quietly and are usually counted only in an audit or a notice. The notes below are general and state the law as it stands at 1 October 2026; they should not be read as advice on any particular set of facts.
Job work at 18% and the return time limits
Since 22 September 2025, most engineering job work has carried GST at 18% under the residual job-work entry (Notification No. 15/2025-Central Tax (Rate) and the matching integrated-tax notification). Job work on specified food, pharma and other listed categories remains at a lower rate. Old invoices are therefore no guide, and the rate on each process should be checked against the notified entry. Material sent out under section 143 of the CGST Act must return within one year for inputs and three years for capital goods; moulds, dies, jigs, fixtures and tools have no time limit. Goods not returned in time are treated as supplied on the day they left, with tax and interest from that day. ITC-04 must report what was sent and what came back. An e-way bill is required for material sent to a job worker in another state, whatever its value.
Advances, milestones and retention money
Machine builders and fabricators often bill in stages: advance, dispatch, commissioning, and retention held for a year or more. GST has one trigger and revenue recognition has another. An advance for goods usually creates a GST liability on receipt. Milestone invoices and retention require a clear view of when supply is complete and when the retained amount falls due. A machine dispatched from Ambad and still awaiting commissioning at the customer's plant raises a further question of when revenue and GST arise; tax paid late on that answer carries interest.
Customer-owned tooling and free-issue material
OEMs and tier-one buyers often supply moulds, fixtures or raw material free of cost. The value of customer-owned tooling is excluded from the value of the parts unless the contract made the tooling the supplier's own cost (CBIC Circular 47/21/2018-GST). Free-issue material must still appear in the job-work and stores records, or the stock register and the GST returns will disagree.
Scrap, by-products and TCS
Turnings, borings, offcuts and runners are sold every month, and GST is charged on the scrap at the rate for its classification. Tax is collected at source on scrap sales under section 394(1) of the Income-tax Act, 2025 (section 206C(1) of the 1961 Act). The Finance Act, 2026 set the rate at 2% from 1 April 2026. Scrap sold should agree in quantity with the scrap that production records show as generated.
Cost sheets that support price talks
Annual price-downs and retrospective revisions are common when the customer is a vehicle maker or a large engineering buyer. A cost sheet built from the bill of materials, the routing and actual rejection gives a figure that can be defended in those discussions. Without one, credit notes under section 34 of the CGST Act are issued against a price the books cannot support, and the margin given away is seldom measured.
Multi-unit groups and common costs
Many groups run a machine shop in Satpur or Ambad with a fabrication or heat-treatment unit in Sinnar. Separate GST registrations are distinct persons, so stock and services moved between them are supplies. Credit on shared services must be distributed through an Input Service Distributor registration, which has been compulsory since 1 April 2025 where units hold separate registrations.
How we work with engineering businesses
Our work usually starts with the job-work challans, the stores register or the cost sheet. Those records decide whether the returns, the bank statement and the accounts can be brought into agreement.
GST and job-work tracking
Challans and ITC-04 tracked against the one-year and three-year return limits, credit kept with the right unit, and replies drafted to notices. See GST.
Costing and price revisions
Cost sheets rebuilt from the bill of materials and routing, so that a price-down discussion rests on a tested figure. See manufacturing finance.
Stock and bank finance
Inventory valuation and physical counts reconciled to the books, and stock statements that agree with the accounts. We also prepare projections and CMA data for renewals.
Income tax for the business and its owners
Year-end tax computation, tax collected and deducted at source, and the MSME payment rule, as well as assessments and notices. See taxation.
Groups with a foreign link
Arm's length pricing, documentation and the accountant's report where a related party abroad buys or sells. See transfer pricing.
Engineering in the Nashik belt
Much of the district's machining, fabrication and process work is located in Satpur, Ambad and Sinnar, and job work moves between these estates daily. A forging may leave Satpur for heat treatment in Ambad and return for machining, with plating or painting done in Sinnar. Each lot has to be traceable in the GST records.
These businesses are often part of a family group that also owns a trading firm or a second plant. The issues on the manufacturing page and the auto components page then sit in one set of books. Units that ship abroad will also meet the questions on the exporters page.
We visit clients in Nashik district. For clients elsewhere in Maharashtra, visits are planned around the work from our Nashik office, as the Maharashtra page describes. Where we are a company's statutory auditor, section 144 of the Companies Act, 2013 limits the other services we may provide to that company and to its holding or subsidiary company.
Common questions
Our job-work invoices still show 12%. Is that still correct?
Since 22 September 2025, most engineering job work has fallen under the residual entry at 18%. Lower rates remain only for listed categories, such as certain food and pharma job work. The process should be checked against the notified entry before the next invoice run, because the rates on old invoices cannot be relied on.
We send material to a job worker in another state. What changes?
An e-way bill is needed whatever the value. The principal manufacturer still tracks the lot under section 143 of the CGST Act: inputs must return within one year and capital goods within three years, and ITC-04 must report the movement. Where a taxable supply is involved, place of supply and the type of tax (IGST versus CGST and SGST) follow the usual interstate rules.
Our customer holds 10% of the invoice as retention for a year. When is GST due?
GST follows the time of supply rules for the goods or services supplied. Retention that forms part of the same supply is usually taxed when the supply is recognised, even though the retained cash is released later. The contract and the invoice trail should be read together before the return is filed.
Do you work only with large machine builders?
No. Owner-managed machine shops and fabricators with one or two sheds and an in-house accountant face the same questions, and the issues on this page apply at every size.
Other industries: Manufacturing, Auto components, Exporters, Family businesses
Where we work: Chartered Accountants in Nashik, Chartered Accountants for businesses across Maharashtra