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In India, a GST-registered online seller should keep an item-wise stock account that connects opening quantities to receipts, dispatches, documented adjustments and closing quantities. Keep the invoices, bills of supply, delivery challans, credit and debit notes, and other records that support those entries. Record the complete address of each place where goods are stored—including goods in transit—and stock particulars for each location. If a third party operates the warehouse, it has separate traceability duties for goods held there; those duties do not replace the seller’s own books.
Which GST rules apply to warehouse stock?
This guide concerns India’s general CGST framework for registered sellers storing goods in their own premises or in a third-party warehouse or godown. Under Rule 56, a registered person other than a person paying tax under section 10 must maintain accounts of goods received and supplied, including relevant stock categories and adjustments. The CBIC Accounts and Records Rules set out the particulars and recordkeeping rules.
The exact treatment can depend on the seller’s tax status, goods, transaction, state, and fulfillment arrangement. In particular, whether a warehouse must be added as an additional place of business and whether a movement needs an e-way bill depend on the applicable facts and current provisions. Do not assume that every warehouse requires the same registration action or that every movement is treated as a sale. Check the latest applicable law and state requirements when deciding what to file or carry.
What should the seller’s stock ledger contain?
The ledger should make it possible to follow stock from its opening balance through every material change to its closing balance. The rules prescribe information to account for; they do not mandate a particular spreadsheet, software product, or paper form. Keep records at a useful item or commodity level so that quantities and locations can be reconciled to the documents behind each entry.
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- Opening balance: the quantity on hand at the start of the period for each relevant item or commodity.
- Receipts: dated inward entries, with the supplier and supporting purchase or receipt records identifiable.
- Supplies and dispatches: dated outward entries tied to the sale or other movement records that explain why goods left the stock.
- Adjustments: goods lost, stolen, destroyed, written off, or disposed of as gifts or free samples, as applicable. Record the reason and supporting evidence rather than silently changing the balance.
- Closing balance: the resulting quantity, with relevant raw materials, finished goods, scrap and wastage accounted for where those categories apply to the business.
Use identifiers that make sense for the inventory—such as SKU, description, unit of measure, batch or other item reference—where they help distinguish goods. The statutory particulars should be met; a seller should not present any particular identifier format as a prescribed GST form unless the applicable rule says so.
Reconcile the ledger with actual movements
A practical periodic check is: opening stock + receipts − dispatches ± documented adjustments = closing stock. This is a control method based on the stock movements the rules require the seller to account for, not a separately prescribed statutory formula. Tie the resulting quantities to returns, warehouse reports and online order or settlement data, and investigate discrepancies instead of carrying them forward unexplained.
Which supporting documents should be kept?
Keep source documents that substantiate each stock entry and movement. Which sales document is appropriate depends on the seller’s registration and tax treatment and the nature of the transaction. Invoice requirements and timing are covered by the CBIC Tax Invoice, Credit and Debit Notes Rules; a warehouse transfer or other movement should not automatically be described as a sale.
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| Record or document | What it helps establish | How to connect it to stock |
|---|---|---|
| Purchase tax invoice or bill of supply | Inward purchase and the supplier details relevant to that transaction | Link it to the dated receipt and relevant item quantities; retain receipt or transport evidence where applicable. |
| Seller’s tax invoice or bill of supply | Outward supply under the seller’s applicable tax treatment | Link the document to the dispatch and item quantities removed from stock. |
| Delivery challan | A movement in a prescribed case, including certain movements not involving a sale | Keep it with the stock movement entry and related transport records. CBIC FAQ guidance describes use of a challan for goods sent on a returnable basis without transfer of title where no sale is involved. |
| E-way bill, when applicable | Movement documentation required under the relevant e-way bill provisions | Retain it with the underlying invoice, bill of supply or delivery challan, as applicable to the movement. |
| Credit and debit notes; return records | Adjustments to transactions and stock returned or otherwise changed | Link each note and return to the affected sale or purchase and record the corresponding stock adjustment. |
| Vouchers and other relevant records | Supporting detail for entries not fully explained by the documents above | Keep a clear link to the ledger entry and retain the underlying evidence. |
The stock-account rules include registers for invoices, bills of supply, delivery challans, credit and debit notes, and vouchers, as relevant. A marketplace dashboard or settlement report can help explain online orders, returns and payouts, but it is a reconciliation aid—not a substitute for prescribed documents or the seller’s own books.
How should online sellers document warehouse movements?
Not every movement of goods is a supply, but a non-sale movement may still need a delivery challan under the applicable rules. For example, CBIC FAQ material discusses challans for goods sent on a returnable basis without transfer of title when no sale is involved. Other prescribed situations may also call for a challan. Keep the movement document with the stock record so a reader can determine what moved, where it went and why.
Where an e-way bill applies, preserve it alongside the invoice, bill of supply or challan for the movement. The CBIC Sectoral FAQs discuss a ₹50,000 movement-value context, but that figure is not a universal trigger: exceptions and other provisions apply. Whether one is required depends on the movement particulars and current rules. Consult the CBIC E-way Bill Rules and relevant state notifications for the specific case rather than relying on the amount alone.
For online sales, retain the seller’s own invoices or bills of supply and dispatch records. Marketplace order, return and settlement reports may be useful to reconcile quantities and payments. Reporting through GSTR-1 depends on the statutory category and transaction; not every online sale belongs in the same reporting bucket. The GST Portal’s GSTR-1 User Guide describes reporting for specified supplies through e-commerce operators.
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Keep the complete address of each place where goods are stored and particulars of stock held there, including goods in transit. The Act also requires books at the principal place of business and accounts at each registered additional place of business. Align the location register with the business’s GST registration particulars and record enough movement history to trace stock between locations.
A useful location register can identify:
- the full storage address and whether it is the principal or an additional place of business as recorded for GST purposes;
- the goods and quantities held at that address, with the owner identified where stock belongs to different parties;
- dates and supporting records for receipts, transfers, dispatches and disposals; and
- stock in transit, including the movement documents that explain its route and status.
Rule 56 provides that if taxable goods are found stored at places other than those declared, without valid documents, the proper officer determines tax payable as if those goods had been supplied. This makes accurate location information and supporting movement documents important, not merely convenient. Whether a particular warehouse must be declared as an additional place of business is fact-specific; confirm the applicable registration requirements rather than treating all third-party storage arrangements alike.
Who is responsible: seller, warehouse operator or transporter?
The seller remains responsible for the accounts required of the seller. Separate recordkeeping duties also apply to warehouse or godown owners or operators and transporters. Section 35(2) of the CGST Act says that every warehouse or godown owner or operator and every transporter, whether registered or not, must maintain records of consignor, consignee and other relevant goods details in the prescribed manner. See the CBIC-hosted CGST Act compilation updated 31 August 2021.
| Party | Core recordkeeping role |
|---|---|
| Registered seller | Maintain the seller’s stock accounts, source documents, tax and input-tax-credit records, supplier and recipient particulars as required, and storage addresses and stock particulars. Keep records at the required registered places or electronically as permitted. |
| Warehouse or godown owner/operator | Track goods during the period they are held there, including receipt, movement, dispatch and disposal. Identify goods item by item and owner by owner, and facilitate inspection. |
| Transporter | Maintain applicable records of goods transported, delivered or held in transit, including branch records. Enrolment provisions may apply to an unregistered transporter. |
| E-commerce operator | Separate statutory reporting or collection duties may apply depending on the operator and supply. These do not remove the seller’s own recordkeeping responsibilities. |
Rule 58(6) requires the warehouse or godown owner or operator to store goods so they can be identified item wise and owner wise and to facilitate physical verification or inspection by the proper officer on demand. A seller should therefore ensure its own records can be matched to the operator’s inventory records, but should not assume that the operator’s system is the seller’s stock account.
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Can GST stock records be kept electronically?
Electronic accounts are allowed, but usable access and preservation matter. The rules require proper backup so records can be restored within a reasonable period after accidental or natural loss. On demand, records must be producible in authenticated hard copy or readable electronic form. The current CBIC Accounts and Records Rules page also describes audit-trail and inter-linkage information that a registered person may be required to provide, including source documents, financial accounts, record layout, data dictionary or code explanations, record counts and sample documents.
Choose paper, a spreadsheet or inventory/accounting software based on whether the method can preserve the required information and produce it clearly. The law specifies record particulars and access qualities, not a particular product. For any method, assess whether it can:
- retain item-level opening balances, movements, adjustments and closing balances over time;
- link ledger entries to source documents and keep records distinct by location and owner;
- preserve an edit trail and explain codes or record layouts when asked;
- export authenticated, readable records rather than only display a dashboard; and
- back up data and restore it within a reasonable time.
Test exports and restoration as part of the recordkeeping process. A screenshot or a marketplace or warehouse dashboard alone may not provide the source documents, ledger links or explanations needed to make records understandable and verifiable.
How long must the records be kept?
Section 36 of the CGST Act sets a general preservation period of 72 months (six years) from the due date of the annual return for the year to which the records relate—not from the date a particular purchase was made. The Act provides for longer retention in relevant circumstances where an appeal, revision, proceeding or investigation is pending. The cited CBIC-hosted Act text is a compilation updated on 31 August 2021; because amendments and the details of a pending matter can affect the applicable deadline, confirm the current provision before disposing of records in a high-stakes case.
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Quick Recap
A practical recordkeeping workflow
- Set up locations and item categories. List storage addresses, identify the stock held at each one, and align the location information with the seller’s GST registration particulars.
- Enter opening stock. Record quantities for each relevant item or commodity at the start of the accounting period, with location and ownership clear where needed.
- Record receipts and dispatches as they occur. Enter the quantity and date, then link the entry to the applicable invoice, bill of supply, challan and transport document.
- Document exceptions. Record returns, losses, theft, destruction, write-offs, gifts, free samples and other relevant adjustments with their reasons and supporting records.
- Reconcile online and warehouse data. Compare the ledger with warehouse reports, order and return information, and settlement reports; investigate differences and preserve the explanation.
- Preserve and test the records. Back up electronic data, test restoration, and make sure readable, authenticated records and supporting documents can be produced when required.
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