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ITC Treatment in case of stock transfer

06 May 2024

HI,

I am starting adiscussion about IT and Profut treatment in case of Stock Transfer from a GSTIN in 1 State to GSTIN in another state registered under the same PAN. So in an event someone transfers the stock in this case so what will be the answer for teh following

1) Does the sending GSTIN need to create an invoice or a stock transfer note ?

2) In either case how will it be shown in GST portal ?

3) Will this amount be considered for calculation of profit on sales or will this invoice amount be excluded ?

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7 Replies

sabyasachi mukherjee (26312 Points)
Replied 07 May 2024

1)yes
2) pls post details

Rajendra Prasad (Employee Private) (1833 Points)
Replied 07 May 2024

1.) Yes has to generate Tax Invoice and has to made stock transfer along with e-waybill if goods value is greater than equal to Rs.50,000/-

2.) In GST portal the sending GSTIN has to show as sale and recipient has to show as inward and can avail input subject to provisions.

3.) As the transaction is with in same PAN it will not be treated as Income or expenditure in P & L Account.

CA Mayank A Jain (Chartered Accountant in Practice) (1146 Points)
Replied 07 May 2024

1) Does the sending GSTIN need to create an invoice or a stock transfer note ? - Sender needs to issue a tax invoice as multiple GSTIN's of the same PAN are treated as different for the purpose of GST.
2) In either case how will it be shown in GST portal ? - The invoice need to be shown as a normal B2B supply. It needs to be shown in table 4 of GSTR-1 and table 3.1(a) of GSTR-3B.
3) Will this amount be considered for calculation of profit on sales or will this invoice amount be excluded ? - at the time of consolidation, this sale will get knocked off hence it would not have any impact on your profitability.

Prakash Dayani (5 Points)
Replied 08 May 2024

Thanks For Your reply,

Certainly helps clear the doubt considerably.

Additionally i would like to know that

When we show the transfer amount in GSTR1 of Sending GSTIN then it will be added to GST turnover and when declaring profit under presumptive income in ITR I will have to declare 6% profit.

Consequently when these goods are finally sold from the recipient GSTIN to end customer then it will again show in the turnover and we will again have to show 6% presumptive profit.

So my question is that , if we remove this amount from the sending GSTIN while declaring turnover to calculate profit on the ITR portal then that may lead to problems as the turnover mentioned in the ITR portal for each business/GSTIN must match with the turnover shown in GSTR 3B ?

CA Mayank A Jain (Chartered Accountant in Practice) (1146 Points)
Replied 08 May 2024

In such case, you need to reply with reasons that GST invoice was issued and disclosed in GST returns due to requirement of schedule I and hence not forming part of the turnover at PAN level for the purpose of income tax.

Prakash Dayani (5 Points)
Replied 08 May 2024

All Right,

Thank You , but does it not sound like the govt has not made any provision to record this in ITR or GST and you have to mention the amount as per your calculation and then if nothing is queried its fine , and if they query or send a notice then you have to reply.

So it sounds like that they might send a notice for a facility / option which they have not actually provided you