What Is Dead Stock?
Every storeroom has a shelf nobody walks to any more.
Dead stock is inventory that has stopped selling and is not going to sell at its normal price. The goods are still yours, still counted, often still insured. What they are not is money, until somebody moves them.
That last part is why it hurts. A dead item is cash you already spent, sitting still, and under GST writing those goods off reverses the input tax credit on top.
What Turns Stock Dead
Stock does not die on purpose. It is the residue of a decision that once looked sensible.
- Over-ordering on a discount. The supplier offered a slab rate, the order doubled, and demand did not.
- Seasons and festivals. Packaging bought for Diwali is worth very little by December.
- A variant nobody wanted. One size, one colour, one flavour that never found its buyer.
- An expiry date you lost track of. Batch tracking exists for this, and stock dies because nobody was watching the dates.
- A product you replaced. The new model lands and the old one stops moving the same week.
Some happen overnight. Most creep up, and many businesses only notice at the annual count.
Dead Stock vs Slow-Moving Stock
This is the distinction that actually matters, because the two need opposite treatment. A falling inventory turnover warns you early; the test here is simply the date of the last sale.
| Aspect | Slow-moving | Dead |
|---|---|---|
| Selling | Yes, just slowly | No, not at normal price |
| Fix | Market it harder | Get cash out of it |
| Value | Carried near cost | Worth only what a buyer pays |
| Urgency | Review it monthly | Decide this month |
Slow-moving stock is a marketing problem. The dead kind is a cash problem, and confusing the two is how a shelf stays full for three years.
Dead Stock Example
Take a garment wholesaler in Malegaon running one shop and a small godown. At the October close, three lines have not sold in six months.
| Item | Units | Cost each | Stock value | Last sold |
|---|---|---|---|---|
| Shirts | 180 | Rs.360 | Rs.64,800 | Mar 2026 |
| Kurtas | 95 | Rs.520 | Rs.49,400 | Feb 2026 |
| Dupattas | 240 | Rs.145 | Rs.34,800 | Apr 2026 |
That is Rs.1,49,000 of cash standing still. Clear the lot at 60% of cost and Rs.89,400 comes back, as an ordinary taxable sale. Destroy it instead and you recover nothing, and under section 17(5)(h) of the CGST Act you must also reverse the input tax credit claimed on those goods. Selling it to a scrap buyer is still a sale, so that credit stays.
Note: this is an invented example for illustration only. The wholesaler, quantities and figures are made up.
How to Clear Dead Stock Before You Write It Off
A markdown that feels painful still beats destroying the goods.
Try the cheapest routes first. Bundle the dead line with something that sells. Push it to a second outlet where the size mix is different. Sell it to a clearance buyer at whatever they will pay. Our discount calculator will tell you what a given markdown leaves you.
Only when none of that works is a write-off the right call, and that page covers the tax side properly. Across the stores we work with at Petpooja, dead lines surface in a monthly review long before the annual count, and every month one stays on the shelf is another month of carrying cost stacking up quietly behind it.
Know What Is Sitting in Your Store
You cannot call a line dead without a current stock position in front of you.
For retail businesses, Petpooja Invoice offers centralised inventory management with real-time stock tracking. It also carries batch and expiry tracking, and business intelligence reports. For restaurants, Petpooja POSS puts inventory on item-wise auto deduction with day-end inventory reports.
Counting by hand? Our stock and inventory template gives you the columns. This guide on what an inventory system should do is the next step.
Pull your stock position this month and mark off every line that has not sold for a full season.
Frequently Asked Questions
No, and the two meanings are opposites. In resale, deadstock means brand new and unworn, which is a selling point. In inventory it means goods that have stopped selling at their normal price.
Many businesses draw the line at one full selling cycle with no sale. For fashion that may be a season; for spares it may be two years. Pick a number, write it into your stock report, and apply it the same way every month.
While you still hold it for sale, yes, the credit you claimed stands. If the goods are written off or destroyed, section 17(5)(h) of the CGST Act blocks the credit and what you claimed has to be reversed. Reducing the book value of stock you still hold and intend to sell is a different thing.
Not for an ordinary clearance sale. Section 15 makes the transaction value the taxable value where the buyer is unrelated and price is the only consideration, so you charge GST on what you receive and keep the credit. Selling to a related party, which includes your own staff, is valued at open market value under rule 28, not at the price you charge.
