Branch Transfer IGST: Input Tax Credit & Valuation Rules

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This discussion clarifies the treatment of IGST for branch stock transfers. It explains that IGST paid on goods transferred between branches can be claimed as input tax credit. The valuation for these transfers is based on the transaction value, which includes material cost and transportation costs. Importantly, if the recipient branch is eligible for full Input Tax Credit (ITC), the value declared on the invoice is considered the open market value according to proviso to rule 28 of CGST Rules.

Anand Sankaran

Anand Sankaran (Querist)
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01 October 2020 Dear all
In my client company stock transfer will be happen. For that IGST They will pay
and take it is input. Transfer price is 40% less than MRP. They normally send the goods in transport
in transfer invoice only cost of material will take place
As per transaction value
Cost of materials
+ transportation cost
will be the transaction value
So in my client company stock transfer invoice contains only Material cost

My doubt is whether transaction is to be included in the transfer value.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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01 October 2020 include transportation cost in transfer value.

Lekhraj sood

Lekhraj sood (Expert)
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02 October 2020 As per proviso to rule 28 of CGST Rules, the value declared on the invoice shall be deemed to be open market value if the recipient unit is eligible to avail Full ITC.So in your case the value declared on the invoice is legally valid.
"Provided further that where the recipient is eligible for full input tax credit, the
value declared in the invoice shall be deemed to be the open market value of the goods or
services."

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