Stock transfers to marketplace warehouses in other states and GST

Moving your own stock to an Amazon or Flipkart warehouse in another State is a taxable supply under GST, even though nobody buys it. Each of your GSTINs counts as a separate person. So the home GSTIN raises a tax invoice with IGST, reports it in GSTR-1 as B2B, and the other GSTIN claims that IGST as credit.

Why is moving my own stock taxed?

GST is a tax that each State collects on what is sold from it. When your stock leaves Rajasthan and is later sold from a fulfilment centre in Haryana, Haryana should get the tax on that sale. The stock transfer invoice is how the system follows the goods. The IGST on it goes with the stock, and the Haryana GSTIN uses it as credit when the goods are sold.

So you are not really paying twice. You are moving tax credit from one State to another, along with the boxes. If you do not have a GSTIN in that State yet, read when an FBA warehouse needs registration in another State first.

Which movements are a supply?

The third row catches many FBA sellers. Amazon can move inventory between its own fulfilment centres. Its Stock Transfer Report lists these movements, as our guide on what the Amazon MTR report means explains. When the two centres sit under different GSTINs of yours, each line is a supply you must report.

What value goes on the invoice?

Rule 28 of the CGST Rules covers supplies between distinct persons. It says the value shall be the open market value, or failing that, the value of goods of like kind and quality. If the receiving branch will sell the goods as they are, you may instead use 90% of the price it charges unrelated customers.

The part that matters most is the second proviso. Where the recipient is eligible for full input tax credit, the value you declare on the invoice is deemed to be the open market value. A marketplace seller's other GSTIN, selling taxable goods, is normally in that position. That is why most sellers simply use the purchase cost.

Is a very low value smart? No. A low value moves less credit to the other State, so it piles up at home, where you may have few sales to use it against. Cost is usually the sensible figure.

A worked example with rupee numbers

Arjun sells home goods from Jaipur with a Rajasthan GSTIN. He also holds a Haryana GSTIN for the Amazon centre there. He buys 400 units at Rs 500 each, Rs 2,00,000, paying Rs 36,000 GST at an illustrative 18%. That Rs 36,000 sits as credit in Rajasthan.

The total tax is Rs 57,600 on a sale of Rs 3,20,000, as it should be. Now imagine Arjun skips the transfer invoice. The Haryana GSTIN has no credit and pays Rs 57,600 in cash, while Rs 36,000 sits unused in Rajasthan. The tax officer in Haryana also sees stock sold that never arrived on paper.

How to record a stock transfer: step by step

1. Raise a tax invoice from the sending GSTIN to the receiving GSTIN, with the destination State as place of supply and IGST, not CGST and SGST.
2. Generate an e-way bill if the consignment is above Rs 50,000. If your aggregate turnover is above Rs 5 crore, the invoice must also be an e-invoice.
3. In the sending GSTIN's GSTR-1, report it in Table 4A as a B2B invoice to your own GSTIN. Add it to the B2B tab of the HSN summary in Table 12 and count it in Table 13.
4. Do not put it in Table 14. The marketplace did not sell anything, so no TCS applies.
5. In the receiving GSTIN, check that the invoice appears in GSTR-2B, then claim the IGST in GSTR-3B.
6. Repeat for every transfer in Amazon's Stock Transfer Report, and for unsold stock sent back.

Remember that these transfers count in your aggregate turnover. The CGST Act includes inter-State supplies between persons on the same PAN in it, so heavy transfers can push you past limits such as the e-invoice threshold sooner than your sales alone would.

The mistake sellers usually make

The most common slip is sending stock to another State on a delivery challan, as if it were the same GSTIN. A challan is meant for movement that is not a supply. Between two GSTINs it is a supply, so a tax invoice is needed. The result is missing output tax at home and missing credit in the other State, both found at once when an officer compares e-way bills with returns.

The second is forgetting the transfers Amazon makes on its own. They are in the Stock Transfer Report every month. Download it with your sales reports and treat it as part of the same job.

Frequently asked questions

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