06 March 2021
Sir, In case -1 Stock as per books Rs:10 lacs Physical stock as per trade Rs:15 lacs In case -2 Stock as per books Rs:15 lacs Physical stock as per trade Rs:10 lacs Question: A gst registered composite scheme dealer difference stock books vs physical stock how to adjustment procedure in gst act.
06 July 2024
For a GST registered composite scheme dealer, adjustments due to differences between stock as per books and physical stock can be handled as follows:
### Case 1: Stock as per Books Rs. 10 lakhs, Physical Stock as per Trade Rs. 15 lakhs
1. **Identify the Difference:** - There is a physical stock surplus of Rs. 5 lakhs compared to the stock recorded in books.
2. **Adjustment Procedure:**
Since you are under the GST composition scheme, which does not allow for claiming input tax credit (ITC), the adjustment for stock differences primarily affects how GST is calculated on the additional stock found during the physical verification.
- **Increase in Stock (Physical Stock > Stock as per Books):** - Calculate GST payable on the additional Rs. 5 lakhs at the applicable composite rate (e.g., 1% or 5%, depending on the type of business). - Pay GST on this additional turnover in the next return filing period. For example, if the composition rate is 1%, you would pay Rs. 5,000 as GST (1% of Rs. 5 lakhs).
- **No Adjustment for Decrease in Stock (Stock as per Books > Physical Stock):** - Since the composition scheme doesn't allow for adjustments or refunds related to stock decreases, there's no action needed for GST purposes in case of a decrease in physical stock.
### Case 2: Stock as per Books Rs. 15 lakhs, Physical Stock as per Trade Rs. 10 lakhs
1. **Identify the Difference:** - There is a physical stock deficit of Rs. 5 lakhs compared to the stock recorded in books.
2. **Adjustment Procedure:**
- **No Adjustment for Decrease in Stock (Stock as per Books > Physical Stock):** - As mentioned earlier, under the composition scheme, there's no mechanism to claim refund or adjust GST for a decrease in stock value below the books.
- **No GST Implication for Decrease:** - Since GST liability is based on turnover and not on input tax credits, there's no additional GST payable or adjustment required for a decrease in physical stock compared to books.
### Important Points to Note:
- **GST Calculation:** GST under the composition scheme is calculated based on turnover at a fixed rate. Any adjustments related to stock discrepancies affect how turnover is calculated for GST purposes.
- **Record Keeping:** Maintain accurate records of stock as per books and physical stock for GST audit and compliance purposes.
- **Consultation:** For specific scenarios and compliance under GST, it's recommended to consult with a GST practitioner or accountant who can provide detailed guidance based on your business operations and GST regulations.
By following these procedures, you ensure compliance with GST regulations while managing discrepancies between stock as per books and physical stock under the composition scheme for dealers.
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