Is Stock Transfer Between Branches Taxable Under GST?
GSTZone Desk · Updated 2026
Short answer
Yes, if the two branches hold SEPARATE GST registrations (typically different states, or the same state with distinct registrations) — GST law treats them as ‘distinct persons,’ and a transfer between distinct persons is taxable even without any actual sale or payment.
In detail
This trips up a lot of businesses because it feels like moving your own goods within your own company — no invoice to an outside party, no payment changing hands, nothing that feels like a real ‘sale.’ But Section 25(4) specifically defines separately-registered establishments of the same business as ‘distinct persons’ for GST purposes, and Schedule I treats a supply between distinct persons as taxable even when made without consideration.
The taxable value is generally the open market value of the goods, though a specific relaxation under Rule 28 allows using the invoice value (even if notional or minimal) where the receiving branch would be entitled to full ITC anyway — a practical concession since, in a fully taxable ITC chain, the exact value used doesn’t change the government’s net revenue.
This entirely changes if both branches operate under the SAME GSTIN — same state, no separate registration taken. In that case it’s purely an internal stock movement within one legal registration, with no GST implication at all (though an e-way bill may still be needed for the physical movement if the value crosses the threshold).
GSTZone tip
If you’re expanding into a new state and setting up a separate GST registration there, plan your inter-branch stock transfer pricing and paperwork from day one — this is one of the most commonly missed compliance points for growing multi-state businesses.
Related questions
Do I need to raise a tax invoice for an inter-branch stock transfer?+
Yes — a supply between distinct persons needs a proper tax invoice, just like a sale to an external customer, showing the applicable GST.
Does this apply to services shared between branches too, like centralised accounting?+
Yes, in principle — services like common administrative or management functions provided by one branch to another distinct-person branch can also be treated as a taxable supply, an area worth getting professional input on for how it’s valued.
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