Stock management

No if in certain case the tradition of business is such that you can't manage daily stock then it's okay and there won't be any penalty from income tax as the auditor will mention in his report that in this kind of business it is not possible to maintain day to day stock register but you have to maintain closing and opening stock.

Also if you are liable to audit under GST then you will compulsorily have to maintain day to day stock as GST doesn't give any relaxation in this regard.

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Thank you

I dont know how it will be possible but as per section 35 of GST act one needs to maintain 

• Production or manufacture of goods
• Inward and outward supply of goods or services, or both
• Stock of goods
• Input tax credit availed
• Output tax payable and paid
• Any other particulars deemed necessary

Now I dont know how will the auditor conduct his audit but yes it is required to be maintained in GST but there is no such requirement in income tax.

Also I don't think there is any penalty the auditor will just give an adverse report i guess.

Hello,

As per Section 35, each registered person is required to maintain a true and correct account of the following:

• Production or manufacture of goods
• Inward and outward supply of goods or services, or both
• Stock of goods
• Input tax credit availed
• Output tax payable and paid
• Any other particulars deemed necessary

This stock register should contain a correct stock of inventory available on a daily basis or at any given point of time.

If the taxpayer fails to maintain proper records in respect of goods/services, then the proper officer shall treat such unaccounted goods/services as if the taxpayer had supplied them. The officer will determine the tax liability on such unaccounted goods. The taxable person will be required to pay the tax liability calculated along with the penalty.

Under the Income Tax Act, the auditor might give a qualification in his Tax audit report.

I hope this answer satisfies your requirement.

Regards,

CA Hunny Badlani

Sir that is your argument and thats valid but GST department doesnt take that into consideration.

If you are convinced don't maintain it and then may be we can explain the department that its not possible. Ask your auditor to mention it properly in his audit report.

Firstly, if you don't properly account your stock in the register and the proper officer finds these unaccounted stock at your business place, then he shall treat such unaccounted goods as if you had supplied them and would determine the tax on it.

Further, if you think that it is not possible to maintain then you can argue the same with the department when the need be, that it is not possible to maintain stock register daily.

Hi,

It is not mandatory to maintain stock register for audit purpose.

Opening or closing stock would be enough.

However, if you are liable for GST audit then you are required to maintain day to day stock register.

Provisions under Section 35 of the Central Goods and Services Tax (CGST) Act, 2017 relating to “Maintaining Accounts and Other Records”, are as under:

Section 35 of CGST Act 2017: Maintaining Accounts and Other Records (CHAPTER VIII – ACCOUNTS AND RECORDS)

(1) Every registered person shall keep and maintain, at his principal place of business, as mentioned in the certificate of registration, a true and correct account of—

(a) production or manufacture of goods;

(b) inward and outward supply of goods or services or both;

(c) stock of goods;

(d) input tax credit availed;

(e) output tax payable and paid; and

(f) such other particulars as may be prescribed:

Provided that where more than one place of business is specified in the certificate of registration, the accounts relating to each place of business shall be kept at such places of business.

In absence of any of the above, the auditors may give a qualify opinion.

If it is not possible to maintain day to day book then you need to argue with the department and justify the same. 

Hi

Although according to the IT act, you are required to maintain the stock register on daily basis, it completely depends on your auditor of he accepts the valuation at year end. 

A daily stock register could only be required if your case is picked up and the Assessing Officer asks for the same. Max. Penalty that could be levied by AO for non maintenance of books of accounts is Rs. 25000.

According to section 35 of CGST Act, you are required to maintain stock registers failure of which shall be liable for penalties.

A stock register would be maintained irrespective of the fact whether the inputs or goods are liable to GST or not. The stocks include your raw materials, work in progress and finished goods.

Sir first we need to tell the client our "bookish" knowledge otherwise later he will say why didn't you tell me this.

So don't get hyper you are not the only hotel owner there tons of them in the country so if everyone says we can't maintain stock then government may provide solution and you need to provide stock details of raw material not finished goods.

Everything depends on your auditor how he wants to present his audit report. I would have mentioned my view in the audit report that being in the restaurant industry it is not possible for the assessee to maintain day to day stock as lots of small things are used.  We need to give our observations but at the end we need to give our observations.

Stock record is required only in audit cases as of now.

Hope you are satisfied now 

Thank you

-stock is mandatory to be maintained under GST and Income Tax.

- For a sweet manufacturer, raw material is sugar, oil, flour etc. You should maintain on a broad level. Don't go into much details which is complicated. Whatever you are claiming as a value of stock on a particular date, it should be backed by the details.

Yes, you need to prepare stock register.

I know it is practically not possible but you can purchase software for the same.

That's what the law states.

Practically speaking, you are going too much into minute details which are not required at all.

Also, in such genuine cases, even the Assessing Officer understands and doesn't levy penalties. But that doesn't mean that you won't maintain any stock details.

If not of each and every small material, stock details can be maintained on a larger scale.

This is what the law requires, we can't argue about that.

You can actually maintain the stock register on a broad level.

if you think that it is not possible to maintain then don't maintain it and let the auditor raise a qualification in his report with a proper reason from your side.