Section 25 co.

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

22 July 2013 A company in west bengal transfers some of its goods purchased at cost price to its branch,outside the State.
How to show this Transfer in West Bengal VAT Return? How much input we wll be able to take it in West Bengal Return,full or some reduced amount?

Querist : Anonymous

Querist : Anonymous (Querist)

22 July 2013 Sorry,the subject should be VAT

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
Follow

23 July 2025 Thank you for the clarification. Your query pertains to **interstate branch transfers under West Bengal VAT** (pre-GST regime), particularly by a **Section 25 company** (now Section 8 company—i.e., a not-for-profit entity). Here’s how to handle it:

---

### ✅ **Scenario:**

A Section 25 company registered under **West Bengal VAT** purchases goods **within West Bengal** and **transfers them at cost** to its **branch outside West Bengal** (not a sale, but stock/branch transfer).

---

### 📋 **Treatment under West Bengal VAT Law:**

#### 1. **Branch Transfer = Not a Sale**

* As per **Section 6A of CST Act**, **stock/branch transfers** are **not treated as sales**, **provided** Form F is obtained from the receiving branch.

#### 2. **How to Show in WB VAT Return:**

* Declare the transfer in:

* **Form 15** (Summary of Purchases/Sales/Stock Transfer).
* Report **interstate branch transfer (stock transfer)** in **Schedule B** (if applicable).
* Mention as **"Stock Transfer to Branch – Outside the State"**.

#### 3. **Input Tax Credit (ITC):**

* **Full ITC is not allowed** in case of branch transfers.
* As per Rule 23(3)(b) of the WB VAT Rules:

> **ITC is allowed only to the extent of 4%**, if stock is transferred outside the state **against Form F**.

##### 🔸 Example:

* Goods purchased within WB: ₹1,00,000 + VAT @ 12.5% = ₹12,500
* Goods transferred to branch in Delhi
* ITC eligible = **₹4,000** (as per 4% limit)
* **Balance ₹8,500** becomes **output tax payable** or needs to be **reversed**.

#### 4. **Condition:**

To claim even the 4% ITC:

* Must obtain **Form F** from the receiving branch and retain supporting documents like transport proof and delivery challans.

---

### 🧾 Summary:

| Particulars | Treatment in WB VAT Return |
| ------------------------------------ | ----------------------------------------- |
| Transfer to branch outside WB | Show as Stock Transfer (not a sale) |
| Form required | **Form F** (from receiving branch) |
| ITC allowed on goods purchased in WB | Only up to **4%**, balance to be reversed |
| VAT Return Schedule | Schedule B or appropriate annexure |

---

### 🔔 Important Notes:

* If **Form F is not received**, then the transfer may be **deemed as sale**, and CST may be applicable.
* Even **Section 25/8 companies** are subject to same VAT compliance, unless exempted by a specific state notification.

---

Let me know if you need help drafting the entry in the WB VAT return or the journal entries for this transaction.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now