Briefly discuss the availability of input tax credit under VAT in respect of stock transfer.

Stock transfers to a branch or consignee are the norms of trade and it could be both inter-state and intra-state. Inter-state sales are covered by Central Sales Tax Act, 1956. However, in case of stock/branch transfer, goods move from one State to another, but there is no 'sale' thus stock transfer/branch transfer is not subject to tax since there is no 'sale'. Thus, the tax paid on inputs used in the manufacture of finished goods which are stock transferred or purchased goods which are stock transferred, is available as input tax credit after retention of 2% of such tax by the concerned state government. Accordingly, Input tax paid in excess of 2% on stock transfers to other states will be eligible for tax credit. Further, intra-state sales / transfer of goods are covered by local VAT and where goods are transferred by a dealer to its own branch which is its additional place of business, there are no VAT implications.