STOCK TRANSFER UNDER GST
Presently under VAT/ CST, interstate Stock transfers are not taxable, on submission of duly completed Form F.
Under GST regime, Form F is no more relevant for Stock Transfer.
Intra-state Stock Transfer with single GST registration
When a business entity has branches in more than one location in same state and has taken single registration, stock transfer between these locations will be treated as Intra state self-supplies and are not taxable.
Inter-State Stock Transfer
When a business entity has branches in more than one location in different states, separate GST registration is required for each state. Stock transfers between these locations will be treated as Inter State and are taxable. Such transactions are taxable even if there is no consideration. CBDT has clarified this in their FAQ.
Tax paid on stock transfer will be fully available as input tax credit to the receiving unit.
Impact of stock transfer on Working Capital requirements:
Stock transfer will have an impact on working capital requirements of business entity. During each stock transfer tax has to be paid under GST, while the input tax credit is effectively used when those stocks will be sold by the receiving branch location. It will lead to blockage of working capital for the time period from Stock transfer to stock sales by the receiving branch or from the point of sale.
Principal and Agent:
Stock Transfer between Principal and agent will be treated as Taxable Supply and Tax has to be paid, as every Agent is required to get its own separate registration.