SUB GST P 3.6

IMPACT ON STOCK TRANSFER UNDER GST

21 May 2020

Meaning of Stock Transfer and Supply

It is very common in a business having PAN transactions to transfer its stock to its other units, warehouses to provide timely delivery orders from Various Geographical Locations. Under the Current Tax situation, interstate or intra-state stock transfers are subject to levy of Excise Duty on the removal of Goods. The same is not subject to VAT or CST. Under the GST, tax is collected on the supply of goods with or without consideration being paid or agreed to be paid.

Under GST Law, the term ‘supply’ includes transactions between a principal and an agent, a supply of goods by a taxable person to another taxable person or non-taxable person during furtherance of a business without consideration is also included within the ambit of ‘supply’.

Moreover, the valuation of the stocks being transferred and the availability of Input Tax Credit are waived.

Valuation

As per the GST Law, the value of supply of goods shall be the price paid or agreed to be paid during supply to supplier and recipient not being related and price being sole consideration. As per the GST Valuation Rules even in case of supplier and recipient being related, the value would be accepted to be the price paid or agreed to be paid where the price is not affected by the relation.

The Valuation Rules provide that if the transaction value is not available, then the transaction value of goods of like kind and quality should be considered. Besides, if goods like kind and quality are not available, then the computed value i.e. the cost of production, expenses, and profit, should be adopted.

Where a supply for consideration of goods of like kind and quality is available, such value is to be adopted, in absence of same, the cost of sales considered