GST on stock transfer between branches

Same GSTIN or different GSTIN?

GST registration is state-wise. A business with a shop in Jaipur and a godown in Jodhpur has one GSTIN for Rajasthan. A business with a godown in Jaipur and a branch in Ahmedabad has two GSTINs, and the law treats the two as distinct persons.

An e-way bill is needed for the movement in all three cases when the value crosses the limit; see e-way bill basics.

What value to charge on an inter-state transfer

Rule 28 of the CGST Rules sets the value for supplies between distinct persons:

• the open market value of the goods; or
• if that is not available, the value of like goods; or
• at the supplier's option, 90% of the price charged to an unrelated customer for like goods.

There is an important relief: where the receiving branch is eligible for full input tax credit, the value declared on the invoice is deemed to be the open market value. Most trading branches fall in this case, so transferring at cost is commonly accepted. Confirm with your CA where the receiving branch makes exempt supplies.

Worked example

A tiles distributor's Morbi (Gujarat) unit sends 1,000 boxes to its own Jaipur branch. Cost is ₹300 a box; the GST rate on the tiles is 18%.

The Gujarat GSTIN reports the invoice in GSTR-1 as a B2B supply to the Rajasthan GSTIN and pays ₹54,000 IGST, usually by using ITC. The Jaipur branch sees the invoice in its GSTR-2B and claims ₹54,000 as ITC. Overall, tax neutral, but only if both sides report correctly and in time.

Steps for each transfer

1. Raise a tax invoice from the sending GSTIN to the receiving GSTIN, with IGST for inter-state movement.
2. Generate the e-way bill (and e-invoice, if the sending GSTIN's turnover requires it; see e-invoicing and IRN).
3. Book the purchase at the receiving branch on arrival.
4. Report in both GSTINs' returns for the same period.
5. Reconcile inter-branch accounts monthly: what one branch shows as sold must equal what the other shows as bought.

Services between branches

Branches in different states also provide services to each other: a head office's accounts team or management. Where the receiving branch is eligible for full ITC, the invoice value is accepted as the value, and many businesses choose to invoice a reasonable amount. This area has seen clarifications over time and depends on facts; take advice before deciding not to invoice. This is general information, not tax advice.

Common mistakes

• Moving goods to another state's branch on a delivery challan, as if it were the same GSTIN.
• Sending branch reporting the invoice, receiving branch forgetting to book it, so ITC is lost or delayed.
• Using CGST + SGST on an inter-state branch transfer.
• Different stock values on each side because one branch added freight and the other did not.

Monthly inter-branch reconciliation

At month end, put both branches' figures side by side. A short table is enough:

Here one invoice of ₹60,000 + ₹10,800 IGST is in transit or not yet booked at Jaipur. Book it in the month the goods arrive, and check it appears in Jaipur's GSTR-2B before the credit is claimed.

Branches in Tally and Cashflow OS

Within one GSTIN, TallyPrime handles transfers through godowns and stock journals. Branches with separate GSTINs are often separate Tally companies. Cashflow OS can hold several Tally companies in one account, so you can switch between branches on the phone, compare stock summaries and check that the transfer invoice appears in the sending branch's GSTR-1 view. If writing back is on, a stock journal or delivery note can be posted from the phone.