We will discuss the applicability of GST on Stock Transfer within and outside the state. We will also discuss the effect of this to reconciliation of GSTR-1 vs GSTR-3B vs Books of Accounts.
Intra-state stock transfer
As per GST law supply of goods by a taxable person to another taxable person or non-taxable person during furtherance of a business without consideration is also included within the ambit of ‘supply’.
But since stock is transferred within state (same GSTIN), there is no need to pay GST on that.
Inter-state stock transfer
In this case stock is transferred to same PAN but different GSTIN. Hence taxpayer needs to show these invoices in his GSTR-1 and pay the tax in GSTR-3B. On the other end, ITC can be availed for the tax paid.
Effect on Sales Reconciliation
In case of Inter-state stock transfer, taxpayer is required to show the invoices in GSTR-1 and pay tax. But in his books of accounts he will not show it as sales. So, there will be a mismatch in sales records.
To reconcile in this case, we have to download GSTR-1 invoice wise and consolidate it using the GSTR-1 Consolidator module of GST Doctor Software. Then we can remove the supplies made to same PAN and compare with the books of accounts with the instructions given on this page.