ware house procedure

[SNEHAL SHAH]

sir,

we are group of companies  a ( gujarat ) , b(Chennai ) , c ( colcutta ) , d ( Bangalor ) . We have client differnt location all over india . All companies manufacturing product same .

My problem is that when we have supply material from gujarat to chenai delivery time ( lead time ) is very high . So we are some solution like we transfer this material to Chenai company & they will sale this material to chennai pary .

Please suggest what procedure we can adopt for this .

Regards,

SACHIN

 

[CA Rachit Agarwal]

If you sell the material from company "a", to company "b", then there will be impact of CST which would reduce the profitability as claim for Input Tax Credit is not be available to company "b" on purchase.

You can open the branch for company "a" in Chennai and then sale the material to "b" in Chennai. Hence the sale will be on VAT. Now on further sale by "b", company "b" will be eligible for the Input Tax Credit.

Further the compliances will increase as per the prevailing VAT Law in the respective state.

[Mukesh Mudi]

What will be impact on entry tax in tamilnadu?

AI Summary

Input Tax Credit availability: structuring inter-company transfers via branch affects VAT/CST treatment and compliance obligations. Restructuring intra group supply by transferring goods between group entities across states triggers inter state tax treatment that can restrict the transferee's ability to claim Input Tax Credit, reducing profitability. Establishing a local branch so the transfer is effected as a VAT sale can preserve credit eligibility for onward sales but increases state VAT compliance; entry tax implications in the destination state must also be considered.