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In the VAT regime, will stock transfer be more beneficial than inter-State sale?

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In the VAT regime, will stock transfer be more beneficial than inter-State sale?
posted Jan 12, 2018 by Chetan Hindu

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1 Answer

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In so far as a decision as to whether goods should be stock transferred and then sold to customers by the branch or should direct inter-State sales be effected, there can be no generalisation. The decision has to be taken on a VAT impact analysis of each individual business.

The tax implications to be considered are:

  • In the case of inter-State sale, the buying dealer has to pay a non-VATable CST while the selling dealer will get the benefit of input tax credit.

  • In the case of stock transfer, though there is no tax on the inter-State movement, the input tax credit will be restricted to the tax paid on inputs in excess of 4 per cent.

answer Jan 15, 2018 by Ananya Saha
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