There was a closing stock of ₹ 20,000.00 of readymade garments taxable@5% and ₹ 100000.00 of fabric as tax free at 30.06.2017 as shown during migration to GST. The dealer received fabrics from factory and converted in readymade garments from job work, hence, no ITC was available during VAT regime. The said stock can be sold st ₹ 5,000.00 only. Now said stock became out of fashion and is not in a condition of sale.
The question is what rate of tax to be charged on such sale and how to show difference, between stock value and sale price, in books of accounts.
Dealer Queries GST on Discounted Garments; Guidance on Accounting for Value Difference Provided A dealer inquired about the Goods and Services Tax (GST) implications for unsalable readymade garments and fabrics initially valued at 20,000 and 100,000 respectively. These items became outdated and could only be sold for 5,000. The dealer sought guidance on the applicable tax rate and how to reflect the difference between the stock value and sale price in the accounts. The response advised crediting the inventory and debiting the cost of goods sold for the inventory value, while crediting the revenue account and debiting the customer account for the sale price. (AI Summary)
TaxTMI 
TaxTMI 
