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Inventory and stock

What is a stock transfer? Meaning, process and GST

Definition

Stock transfer: A stock transfer moves goods from one of your own locations to another, such as a godown to a shop, without selling them, so each location's stock stays correct.

Also called: inter-branch transfer, branch transfer, godown transfer, stock transfer note, inter-location transfer

What a stock transfer is

A stock transfer happens whenever goods move between places that belong to the same business: from the warehouse to a shop, from the factory store to the dispatch godown, or between two branches. Nothing is sold, so the business's total stock does not change, but one location goes down and the other goes up by the same amount.

A transfer record should show the date, the from and to locations, each product and quantity, the batch, who sent the goods and who received them. Without one, the shop's stock looks short and the warehouse's looks high, and the next stock take finds both wrong.

Stock transfers and GST

Under GST, each registration is a distinct person, and Schedule I of the CGST Act treats supplies between distinct persons in the course of business as supplies even when no payment is made. So sending goods from a branch registered in one state to a branch registered in another usually needs a tax invoice, charging IGST. Moving goods between your own godowns under the same GSTIN is not a supply, and rule 55 of the CGST Rules allows goods moved for reasons other than supply to travel with a delivery challan instead of an invoice. Valuation and e-way bill rules can also apply, so check the details with your accountant.

Common transfer mistakes

Most transfer errors come from recording the movement late, or only once.

  • Moving goods without recording them, then fixing the difference at the next count.
  • Recording the transfer at one end only, so goods are counted twice or not at all.
  • Losing the batch and expiry date on the way, so the shop cannot sell by expiry.
  • Sending stock that is about to expire to a slow-moving shop.

Worked example

A clothing brand restocking its shop

A brand's warehouse in Surat sends 120 kurtas, 40 each in sizes M, L and XL, to its shop in Ahmedabad, under the same Gujarat GSTIN. The warehouse goes from 600 kurtas to 480 and the shop from 30 to 150, while the brand still holds 630 in all. The goods travel with a delivery challan. If the shop were in Mumbai under a separate Maharashtra GSTIN, the same movement would need a tax invoice charging IGST.

In managemate

In managemate, open Transfer stock from Inventory, then choose the product, the from and to locations, the quantity and, if you like, the lot; otherwise the earliest expiry goes first. The stock leaves one location and arrives at the other in the same step, keeping its lot number, expiry date and cost, and the stock ledger shows a Transferred out and a Transferred in line with who recorded them. Each transfer covers one product. There is no in-transit stage, transfer number or printed transfer note, and managemate does not create a delivery challan or tax invoice for a transfer, so prepare those separately when the goods need them.

Sources

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