Regarding Stock Transfer

[Rahul Gupta]

Hi

We are operating a branch of our business 25 kms away from our head office, under the same GSTIN. We used to do stock transfers on a daily basis to this branch. Instead of an invoice a stock transfer challan was issued along with the goods and no tax was levied.

We are concerned that whether these stocks will be taxable under the new GST structure? The reply we have been getting everywhere is that these intrastate stock transfers are not taxable under the new tax structure if the branches are operated under the same GSTIN. But noone has mentioned the exact Article number regarding the same.

Kindly help us out in this regard as we might have to shut down the branch if the goods are taxed. And if the goods can be transfered without charging any tax then kindly mention the article number wherein it is stated that these goods are not taxable.

Regards

Rahul Gupta

[KASTURI SETHI]

Under GST stock transfer from factory to depot or banch office and branch office to another branch office located outside the State is taxable. One branch will pay GST and other branch will take ITC. So no loss to the assessee. It is called GST chain. The purpose behind this is to plug the leakage of revenue in the guise of stock transfer and also sharing the revenue between State and the Centre

[Rahul Gupta]

Ty for your reply. Our branch is located within state. The problem is that we don't know the exact article wherein it is stated that no tax will be levied on stock transfers within state if the branches are operating on the same GSTIN.

We have to do the necessary modifications in our software program and are unsure how to go about it.

[KASTURI SETHI]

Reply posted by me is also applicable to stock transfers within State. Stock transfers within same State from factory to depot or branch offices or one branch office to an other branch are called 'supplies' in GST and are not exempted even without consideration under GST because such supply is in course of or for furtherance of business.. Depot is no more extended branch of factory under GST.. Both are distinct persons may be holding one PAN.

[Guest]

In case of Additional place of Business is same state approx 2 km form Registered factory. in this case supply / stock transfer of goods for home consumption is taxable or not?

[Kishan Barai]

Transfer of Stock is not taxable under GST. You need to create accurate Chalan with GST & ARN number mentioned , in it you also need to mention goods ment for stock transfer to our Registered premises, both name and address has to be mentioned of your premises with accurate Product details with HS Code

[KASTURI SETHI]

Extract of Q.No.12 of CBEC's FAQs published in the Tribune newspaper dated 6.7.17

Q.No.12. Stock transfers have been made taxable in GST. Will it impact adversely ?

Ans. The objective of taxing stock transfers is just to ensure that the ITC moves along with the supply of goods to the place where a supply is finally consumed . This is to ensure that the taxes accrue to the State where a supply is consumed. If the stock transfers are not taxed, the ITC would not flow to other State along with the supply and trader will not be able to utilise the credit in another State. Therefore, taxing of stock transfers is in the interest of traders and is perfectly revenue neutral for the traders.

AI Summary

Stock transfers taxable under GST to ensure input tax credit follows goods and prevent revenue leakage. Stock transfers between business locations are treated as supplies under GST and are taxable, with depots and branch offices regarded as distinct persons; the transferee may claim input tax credit. Taxing transfers ensures that input tax credit follows goods to the place of consumption and that tax revenue accrues to the State of consumption; proper documentation is necessary to make tax and credit flow traceable.