Consignment

What Is Consignment?

Consignment is an arrangement, common in Indian trade, in which the owner of goods (the consignor) sends them to an agent (the consignee), who sells them on the owner’s behalf for a commission. Ownership stays with the consignor until the goods are sold, so anything unsold is still the consignor’s stock.

Under GST, sending goods to such an agent can itself be a taxable supply under Schedule I of the CGST Act. In shipping, the word also means a single courier or truck load, covered in the FAQs.

How goods and money move in a consignment Consignor owns the goods Consignee sells as agent Customer buys and owns Goods Sale Account sales and payment, less commission The goods travel forward, but ownership jumps straight from the consignor to the customer at the moment of sale. The consignee never owns them.

How a Consignment Runs, Start to Finish

A consignment usually moves through five stages.

1. The consignor sends the goods, usually on a delivery challan, or on a tax invoice where GST treats the transfer as a supply (see below).
2. Goods sit with the consignee, who stores and displays them but does not book them as purchases.
3. At agreed intervals the consignee sends an account sales: what sold, at what price, the expenses and the commission.
4. Payment follows, net of commission and expenses.
5. Unsold goods either come back or stay on for the next period, and either way they remain in the consignor’s closing stock at cost.

Among the retail businesses we work with, consignment disputes rarely start with the commission rate. They start with a missing account sales, when neither side can say how many pieces are still on the shelf.

Consignment vs Sale

The real question is who owns the goods, and who is stuck with them if they do not sell.

Consignment is also not the same as moving stock to your own branch or godown. That is a transfer order, where both ends belong to one business.

Consignment Example

A Channapatna maker of lacquered wooden toys sends 320 toys to a gift shop in Panaji, Goa, in August 2025. The shop sells them under its own bill at Rs.640 each and keeps 20% of sales as commission, and all figures here leave out GST.

Because the shop bills in its own name, the maker raises a tax invoice valued at Rs.1,84,320 under Rule 29’s 90% option, well above the Rs.50,000 inter-state limit, so the load travels with an e-way bill.

By 31 October 2025 the shop has sold 236 toys and sends this account sales.

Note: this is an invented example for illustration only.

The 84 unsold toys never became the shop’s stock. They sit in the maker’s books at Rs.22,260, and the maker can leave them in Panaji, call them back before Diwali or send them to another shop without touching the shop’s accounts.

How GST Treats Goods Sent on Consignment

Here the answer turns on one detail: whose name goes on the customer’s bill.

Paragraph 3 of Schedule I to the CGST Act treats sending goods to an agent who sells on your behalf as a supply, even when no money changes hands. CBIC’s Circular 57/31/2018-GST narrows that. If the agent invoices customers in its own name, as the Panaji shop does, the transfer to the agent is a supply. If the agent sells but the consignor’s name goes on the bill, it is not.

When it is a supply, Rule 29 of the CGST Rules values it at open market value, or at the consignor’s option at 90% of the price the agent charges unrelated customers. Where it is not, the goods usually move on a delivery challan instead. Check the arrangement with your CA before the first load goes out.

Three more points catch first-time consignors:

• Agent registration: Section 24 of the CGST Act requires anyone supplying goods on behalf of another taxable person to register, whatever their turnover.
• E-way bill: Rs.50,000 is the limit for movement between states, but each state sets its own limit inside its borders. Handicraft makers who are exempt from registration need one for inter-state movement whatever the value, and this distance calculator helps with the validity period.
• Commission: the agent’s commission is a separate service, taxed apart from the goods.

Check Your Own Stock Before the Next Load

Before sending a fresh load, you need two numbers: what the last account sales says is still unsold, and what you hold yourself. For retail businesses, Petpooja Invoice gives real-time stock tracking and helps you identify underperforming items to prevent overstock. It works out the GST on every invoice it generates, and its plans include E-way Bill & E-Invoice.

Line up your last three account sales against the stock at home, and see which items have earned a second consignment.

Frequently Asked Questions