What Is Opening Stock?
Opening stock is the value of goods a business holds at the start of an accounting period, and it is normally the same figure as the closing stock of the period just ended.
For most registered Indian businesses the period that matters for tax starts on 1 April, because the GST annual return under section 44 of the CGST Act is filed for each financial year, though some smaller taxpayers can be exempted from it.
Traders who keep the Chopda Pujan tradition also open fresh account books at Diwali, which falls on 8 November in 2026, so the same shop can have two opening stock figures in one year: one for the tax books and one for its own festive books.
How Opening Stock Fits the Formula
Opening stock is one of three numbers that give the cost of what you sold:
Cost of goods sold = opening stock + purchases minus closing stock
Stock you started with, plus everything you bought, minus what is still on the shelf, is what went out of the door. But get the opening figure wrong and the cost of sales, and so the profit, moves by exactly the same amount.
And opening stock feeds inventory turnover, where average stock is usually worked out as opening plus closing stock divided by two.
Opening Stock vs Closing Stock
The two are the same stock seen from opposite ends of a date.
| Aspect | Opening stock | Closing stock |
|---|---|---|
| When | First day of the period | Last day of the period |
| Comes from | Last period’s closing stock | A count on the last day |
| Formula | Added | Subtracted |
| If wrong | This period’s profit is off | This and next period’s are off |
That last row is why the closing count gets so much attention. An error in it is carried straight into the next period as opening stock.
Opening Stock Example
A brass and steel utensils shop in Mirzapur works out its cost of goods sold for the six months to 30 September 2026, before the Diwali rush begins.
| Line | Period | Amount |
|---|---|---|
| Opening | 1 April 2026 | Rs.4,62,300 |
| Purchases | April to September | Rs.7,85,600 |
| Closing | 30 September | Rs.5,10,900 |
| Sold | Cost of goods sold | Rs.7,37,000 |
Note: this is an invented example for illustration only. The shop and figures are not real.
The Rs.4,62,300 was the closing count on 31 March 2026. The Rs.5,10,900 on 30 September becomes the starting figure for the October to March half, which is when the festive purchases land.
The GST Rule on Opening Stock
GST cares about the stock you start with when a business, or one of its supplies, moves into regular GST. Under section 18(1) of the CGST Act, the credit on inputs held in stock, and on inputs inside semi-finished or finished goods, is available in four cases:
- Registering because you became liable. If you apply within thirty days and registration is granted, the stock held the day before your tax liability starts counts.
- Registering voluntarily. The stock held the day before registration is granted counts.
- Leaving the composition scheme. The stock held the day before you start paying regular GST counts, and capital goods qualify too.
- An exempt supply becoming taxable. Stock held for that supply the day before it becomes taxable counts, and so do capital goods used only for it.
All four come with conditions, and section 18(2) bars credit on any invoice more than a year old, so the stock list and the purchase invoices behind it need to be ready for that exact day. A small shop whose festive sales push it past the registration threshold should count its stock as of the day before its liability starts, not months later.
Get Opening Stock From a Real Count
The habit that saves trouble is a physical count on every date you close a set of books, 31 March for the tax year and the eve of Diwali if you keep festive books too, recorded in a stock and inventory management template or your software. Petpooja Invoice offers centralised inventory management with real-time stock tracking, so each count starts from a running record rather than a blank sheet.
Our list of inventory mistakes retail stores make covers the counting slips that distort opening stock.
Frequently Asked Questions
Normally not. A difference means either a correction to last year’s figures, which has to be disclosed under the accounting standards, or an error, and either way it needs explaining to your auditor.
At the value carried from last year’s closing stock, which in India follows AS 2 or Ind AS 2: the lower of cost and net realisable value, never the selling price as such. That keeps both ends of the year on the same basis.
Usually not, unless it starts with goods brought in by the owner, bought before trading began or taken over with an existing business. From the second period on, it opens with whatever the first period closed with.
On the debit side of a trading account, while company accounts show it within the change in inventories in the profit and loss statement. On the balance sheet it appears only as last year’s comparative figure.
