This guide is in English for now. The tool itself works in your language.
Stock › GST rules for stock
GST rules for stock: what to record and when credit goes back
What rule 56 of the CGST Rules asks you to record about stock, how long to keep it, and why goods lost, destroyed or given free lose their input tax credit.
Rule 56: GST asks for a stock account
Under rule 56(2) of the CGST Rules, 2017, a registered person must keep an account of stock of the goods received and supplied. It must show the opening balance, receipts, supplies, goods lost, stolen, destroyed, written off or given away as gifts or free samples, and the balance of stock, including raw materials, finished goods, scrap and wastage.
A dealer who pays tax under the composition scheme (section 10) is left out of this stock account rule, but must still keep the other accounts and records. Everyone keeps records of advances received and paid.
Where the records are kept, and for how long
- At the principal place of business shown in your registration (additional places keep their own records), on paper or electronically.
- For 72 months from the due date of the annual return of the year they belong to (section 36 of the CGST Act). An officer can ask for them in an audit or inspection.
Stock that leaves without a sale: input tax credit
Section 17(5)(h) of the CGST Act says there is no input tax credit on goods lost, stolen, destroyed, written off, or given away as gifts or free samples. If you claimed credit when you bought them, reverse that credit (pay it back) when the goods go this way. Section 17(5)(g) blocks credit on goods used for personal consumption, so goods taken for your own use also lose their credit.
| What happened | Record it as | Input tax credit |
|---|---|---|
| Broken, spoiled, burnt | Damaged | Reverse the credit on those goods |
| Theft, missing | Lost or stolen | Reverse |
| Given free to customers | Free sample | Reverse |
| Diwali gifts | Gift | Reverse |
| Taken home by the owner | Own use | Reverse |
| Expired and thrown away | Expired | Commonly reversed as written off; ask your accountant |
Normal process losses in manufacturing (evaporation, moisture, trimming) are treated differently from goods lost or destroyed; ask your accountant how to treat yours.
Gifts to an employee worth up to ₹50,000 in a year are not treated as a supply (Schedule I of the CGST Act), but the credit on the gifted goods is still blocked. These are the rules as they stand in November 2026; GST changes often, so check CBIC (cbic-gst.gov.in) or your accountant before you file.