Interstate branch transfer valuation

[ravi kiran]

Dear Sir

Head office in Mumbai Pan No is same for HO & Branches with different GST Nos.

Branches in 5 states. Trading company importing inks from Europe in Mumbai and stock transfer to branches.Customs duty is paid, fright charges paid, insurance paid, landed cost is arrived at say ₹ 100. it is final product that us imported. No further processing is involved either Ho or at branches.

The selling price in Ho to its customers and in Branches to customers vary. Say ₹ 200 or 250 or 300.

At what price, stock transfers should be done. Is it ₹ 100 or with 10% addition ₹ 110. Or 90% of the sake price say ₹ 180

Which rule is applicable for our organisation rule 28 or 30?

Thanks & Regards

ravi kiran

8754466964

[KASTURI SETHI]

Rule 28 (1)(a) of CGST Rules safe. You will resort to Rule 30 only if value cannot be determined under Rule 28. Keeping in view of both provisos of Rule 28, value to be charged should not be less than similar goods. In other words, open market value should be preferred. No question of 110% under Rule 30 when similar goods (kind and quality) are available in the market.

Focus on following the valuation not less than market price.

[Ganeshan Kalyani]

Also see the rule which provides that if the recipient is able to take Input Tax Credit then any value is considered as correct.

[Shilpi Jain]

2nd proviso to rule 28 provides for this.

However many assesses are not very comfortable to use this since they fear department intervention.

So if credit is eligible to the recipient unit in full, any value can be charged, else use open market value 200 or 250 or 300 - similar transaction's value

[KASTURI SETHI]

I agree with Sh.Ganeshan Kalyani Ji and Madam Shilpi Jain.

[Ganeshan Kalyani]

Thank you Sri Kasturi Sir.

AI Summary

Valuation for interstate stock transfers: prefer open market value; recipient's ability to claim input tax credit permits agreed values.
Interstate stock transfer valuation should follow the primary valuation approach that prefers open market value when similar goods exist; the residual valuation method is used only if primary valuation cannot determine value. If the recipient branch can claim full input tax credit, the parties may agree any value for the transfer, though taxpayers often use open market transaction values to avoid tax authority scrutiny.