transfer of INVENTORY

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Mayank Agarwal (Querist)
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15 November 2010 Plz let me know whether transfer of Inventory form Subsidiary Co. to Holding co. is chargeable to vat under UP Vat act???

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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16 November 2010 Both are different entities, so VAT applicable

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Mayank Agarwal

Mayank Agarwal (Querist)
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20 November 2010 Thanks for reply......but as there is an exemption under IT Act for transfer from Subsidiary to Holding. No such exemption Under UP Vat act??

Mayank Agarwal

Mayank Agarwal (Querist)
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27 November 2010 Plz Suggest.......

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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02 August 2025 Got it! Here’s a clear answer on transfer of inventory from Subsidiary to Holding company under **UP VAT Act**:

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### Transfer of Inventory from Subsidiary to Holding Company – VAT Implication

* **Subsidiary and Holding Company are two separate legal entities.**
* Under the **UP VAT Act**, transfer of goods between two separate entities is considered a **sale** and is **subject to VAT** unless specifically exempted.
* **No general exemption** exists under the UP VAT Act for transfer of inventory from subsidiary to holding company like the exemption under the Income Tax Act for share transfers.
* Therefore, **VAT is applicable on such transfer at the applicable rate** based on the nature of goods.

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### Key Points:

* The **Income Tax Act exemption** you mentioned relates to **transfer of shares**, not inventory or goods.
* VAT is a **state-level tax on sale of goods**; so, it applies unless explicitly exempted by the VAT laws.
* To avoid double taxation, some states have provisions for “transfer of goods between related entities” but this needs to be checked specifically in UP VAT rules or notifications.

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### What you can do:

* Check if there is any **specific notification or exemption under UP VAT for such intra-group transfers**.
* If not exempt, the subsidiary must **charge VAT on the sale price** of the inventory to the holding company.
* The holding company can claim **input tax credit** on the VAT paid (subject to conditions).

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If you want, I can help you look up the latest UP VAT notifications or suggest accounting entries for this transaction. Would that be helpful?

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