stock transfer
This query is : Resolved
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)
11 July 2016
yes, there is NO vat on stock transfer
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
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?
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Refund Annexure-B
- Liable to deduct tds and 44ADA
- Sale of Equity shares for Purchase of Residential Property
- Nomination of Bank for refund in itr 2
- Section 56(2) of the Income tax Act 1961 , Gift to relative .
- ECO SUPPLY REPORTIONG IN GSTR-1
- Is Interest applicable for payment made through credit ledger vide DRC03 for FY 2020-21 & 2021-22
- CCFS 2026 Schemed
- Subscription paid to foreign customer
- Two seprate Invoice needed
- E Commerce GSTR1 & 3B how to file
- GST Cancellation without jurisdiction
- Legal Opinion on Registrar's Refusal to Investigate a Society for Non-Renewal and Non-Compliance
- GST Refund_RFD-01
- Form10BD was uploaded successfully without any Error but after 24 hours, Form10BE are not available
- Annexure B utility for GST Refund
- Tax amount diff in Gstr1 and 3B in tax compare reports
- Tds on GST in connection with sale to public company
- Restoration of certificate of practice
- Regarding change in correspondence address in SSP portal
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
CAclubindia
