Inventory and stock management software: what it must do in India
Godowns, batches, expiry, reorder levels, valuation methods the standards allow and the GST documents that move with stock, from the team building ERPStack.
Last updated 21 October 2026
What is stock management software?
Stock management software records every movement of goods in and out of your godowns, so you know what you hold, where and at what cost. For an Indian business it should handle several locations, batch and serial numbers, expiry and reorder levels, value stock by FIFO or weighted average, and tie movements to GST invoices, challans and e-way bills.
Where ERPStack is today
ERPStack is in development. It is not yet available to download or buy, and the features on this page are planned, not shipped.
Sign upWhat must stock management software do for an Indian business?
| Feature | What it should do |
|---|---|
| Multiple godowns | Stock by location, with transfers between godowns, shops and branches |
| Batch and serial numbers | Track each batch or unit from receipt to sale, for recalls and warranty |
| Expiry dates | Warn before stock expires and issue the earliest-expiring batch first |
| Reorder levels | Flag items below a minimum and suggest what to buy |
| Units of measure | Buy in one unit and sell in another, such as cartons and pieces |
| Valuation | FIFO or weighted average cost, applied consistently |
| Adjustments | Record goods lost, stolen, destroyed, written off, gifted or given as free samples |
| Barcodes | Scan to receive, pick and sell instead of typing item codes |
Several of these are also GST record-keeping duties. Under CGST Rule 56(2), every registered person other than a composition taxpayer must keep stock accounts showing the opening balance, receipts, supplies, goods lost, stolen, destroyed, written off or disposed of as gifts or free samples, and the closing balance, covering raw materials, finished goods, scrap and wastage. Rule 56(5) also requires the address of every place where goods are stored, including goods in transit, with the stock held there.
Which stock valuation methods are allowed in India?
Both Ind AS 2 and AS 2 require inventories to be measured at the lower of cost and net realisable value, and both name the cost formulas you may use.
| Cost formula | How it works | Under Ind AS 2 and AS 2 |
|---|---|---|
| First-in, first-out (FIFO) | Items bought or made first are treated as sold first; closing stock is the latest purchases | Permitted |
| Weighted average | Each item is costed at the average of opening stock and purchases, worked out periodically or on each receipt | Permitted |
| Specific identification | Each item carries its own actual cost | Required for items not ordinarily interchangeable, such as goods made for a specific project |
| Last-in, first-out (LIFO) | Items bought last are treated as sold first | Not among the permitted formulas |
Ind AS 2 also says the same formula must be used for all inventories of a similar nature and use. Software should let you set the method per item group and then stop casual changes to it.
How should stock movements link to GST documents?
Every movement of goods needs a document, and the document depends on why the goods are moving. Good software creates it from the stock entry, so the two can never disagree.
| Movement | Document | Rule |
|---|---|---|
| Sale to a customer | Tax invoice | Rule 46 |
| Goods sent to a job worker | Delivery challan in lieu of invoice | Rule 55(1)(b) |
| Goods moved for reasons other than supply | Delivery challan | Rule 55(1)(c) |
| Consignment value above ₹50,000 | E-way bill before movement starts | Rule 138(1) |
| Goods sent to a job worker in another state | E-way bill whatever the value | Rule 138(1), proviso |
Job work also needs tracking after the goods leave. Under Section 143 of the CGST Act, inputs sent for job work must come back (or be supplied from the job worker’s premises) within one year, and capital goods other than moulds, dies, jigs, fixtures and tools within three years. Inputs not returned in time are treated as supplied on the day they were sent out. Stock software should show what is lying with each job worker and how long it has been there. For the challan layout, see the delivery challan format.
How do you choose inventory management software?
| Question to ask | What a good answer looks like |
|---|---|
| Does it track stock by godown? | Balances per location, with transfers that need both ends to confirm |
| Can it handle batches, serials and expiry? | Set per item, enforced at receipt and sale |
| Which valuation methods does it offer? | FIFO and weighted average; no LIFO for Indian books |
| Does a sale reduce stock automatically? | Invoices, challans and returns move stock without a second entry |
| Can it create e-way bills and challans? | From the stock movement, not by retyping into another tool |
| Does it show stock with job workers? | Quantities and age by job worker |
| Does it post to accounts? | Stock value and cost of goods sold reach the ledgers directly |
| Can you get your data out? | Full export of items, balances and movements in open formats |
Wondering what it will cost? Perimattic’s guide to inventory software cost explains the price drivers, and the inventory management software calculator helps you size what your business needs before you talk to vendors.
How will ERPStack handle stock?
ERPStack is an ERP for Indian small and mid-sized businesses that Perimattic is building. Inventory is planned as a core module, sharing one set of records with billing, purchasing, manufacturing and accounts:
- Stock by item, godown, batch and serial number, with expiry dates and reorder levels.
- FIFO or weighted average valuation, set per item group.
- Delivery challans and e-way bills created from the stock movement itself.
- A job-work register showing what is with each job worker and for how long.
- Stock value posted straight to the accounting ledgers.
Status: ERPStack is in development and none of this is available to use yet. The inventory module is planned, not shipped. Sign up to tell us how you track stock today.
This page is general guidance, not tax, legal or accounting advice. The rules and standards cited were checked on 22 October 2026.
Plan your stock system
Stock management, answered
Is inventory management software the same as stock management software?
In practice, yes. Both terms describe software that records goods received, issued, moved and sold, and keeps a running balance by item and location. Some vendors use inventory management for systems that also plan purchases and production, but the core job of an accurate stock ledger is the same.
Can a business in India value stock using LIFO?
Not under the Indian accounting standards. Ind AS 2 and AS 2 both allow the first-in, first-out (FIFO) or weighted average cost formulas, with specific identification for items that are not ordinarily interchangeable. LIFO is not among the permitted formulas, so stock software for Indian books should not offer it as a valuation method.
Does stock software need to handle GST?
It should. CGST Rule 56(2) requires most registered businesses to keep stock accounts showing opening balance, receipts, supplies, goods lost, stolen, destroyed or given away, and closing balance. When those records come from the same entries as your invoices, challans and e-way bills, stock and GST returns stay consistent.
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