stock transfer
This query is : Resolved
CA. Neelan Vinil
(Querist)
11 July 2016
hi... is stock transfer exempt from vat? can the branch where stock is transferred get input vat? ( transfer from Bangalore to Mumbai)
Amol S Joglekar
(Expert)
11 July 2016
yes, there is NO vat on stock transfer
CA. Neelan Vinil
(Querist)
11 July 2016
but one of our clients have shown Kvat in invoice but entered gross amount itself, ie they have not shown vat in tally. is it correct sir
CA. Neelan Vinil
(Querist)
11 July 2016
showing vat in invoice itself wrong?
25 July 2025
Here’s the clear scoop on your query about **stock transfer and VAT**:
---
### 1. Is Stock Transfer Exempt from VAT?
* **Yes**, stock transfer (movement of goods between branches of the same company) is generally **not a sale** but a **transfer of goods**.
* Hence, **no VAT is charged** on stock transfers.
* This is usually supported by issuing a **C Form** (or relevant form) in interstate stock transfer cases to avoid CST or VAT.
---
### 2. Can the Branch Receiving Stock Get Input VAT?
* Since **no VAT is charged on stock transfer**, there is **no input VAT** to claim by the receiving branch.
* The branch cannot claim input VAT on goods received via stock transfer because VAT wasn’t paid on that transaction.
---
### 3. About Client Showing VAT in Invoice but Not in Accounting (Tally)
* **Showing VAT on invoice but not accounting for it (not entering in Tally)** is **not correct** practice.
* Invoice should clearly state whether VAT is charged or not.
* If it’s stock transfer, the invoice should be **without VAT** and clearly mention that it is a stock transfer.
* If VAT is shown on invoice but not accounted for, it creates **discrepancies** and may raise audit or compliance issues.
---
### **Summary:**
| Scenario | VAT on Stock Transfer | Input VAT at Receiving Branch | Invoice Practice |
| ---------------------------------- | --------------------- | ----------------------------- | --------------------------------- |
| Stock transfer between branches | No VAT | No input VAT | Invoice should NOT show VAT |
| Showing VAT on invoice incorrectly | Wrong | No valid input VAT | Invoice and accounting must match |
---
**So, your client should NOT show VAT on stock transfer invoice.** If VAT is shown, it should also be accounted properly in books, else it’s incorrect.
---
If you want, I can help draft a sample invoice or a clarification note for your client. Want me to do that?
---
### 1. Is Stock Transfer Exempt from VAT?
* **Yes**, stock transfer (movement of goods between branches of the same company) is generally **not a sale** but a **transfer of goods**.
* Hence, **no VAT is charged** on stock transfers.
* This is usually supported by issuing a **C Form** (or relevant form) in interstate stock transfer cases to avoid CST or VAT.
---
### 2. Can the Branch Receiving Stock Get Input VAT?
* Since **no VAT is charged on stock transfer**, there is **no input VAT** to claim by the receiving branch.
* The branch cannot claim input VAT on goods received via stock transfer because VAT wasn’t paid on that transaction.
---
### 3. About Client Showing VAT in Invoice but Not in Accounting (Tally)
* **Showing VAT on invoice but not accounting for it (not entering in Tally)** is **not correct** practice.
* Invoice should clearly state whether VAT is charged or not.
* If it’s stock transfer, the invoice should be **without VAT** and clearly mention that it is a stock transfer.
* If VAT is shown on invoice but not accounted for, it creates **discrepancies** and may raise audit or compliance issues.
---
### **Summary:**
| Scenario | VAT on Stock Transfer | Input VAT at Receiving Branch | Invoice Practice |
| ---------------------------------- | --------------------- | ----------------------------- | --------------------------------- |
| Stock transfer between branches | No VAT | No input VAT | Invoice should NOT show VAT |
| Showing VAT on invoice incorrectly | Wrong | No valid input VAT | Invoice and accounting must match |
---
**So, your client should NOT show VAT on stock transfer invoice.** If VAT is shown, it should also be accounted properly in books, else it’s incorrect.
---
If you want, I can help draft a sample invoice or a clarification note for your client. Want me to do that?
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