Rule 172 of the Draft Income-tax Rules, 2026 lays down structured guidelines for determining expenses relating to audit and inventory valuation under sections 268(5)(i) and 268(5)(ii) of the Act. It mandates that every Chief Commissioner of Income-tax maintain a panel of eligible accountants and cost accountants drawn from the categories specified under the Act. When the Assessing Officer directs a special audit or inventory valuation, the expenses, including remuneration of the appointed Accountant or Cost Accountant and their assistants (qualified, semi-qualified, or otherwise), must be calculated on an hourly basis within a prescribed range of ₹3,750 to ₹7,500 per hour. The relevant period is to be specified in terms of the number of hours required for completion of the report, as determined under sections 268(8), 268(9), or 268(10), as applicable. The rule further requires the appointed professional to maintain a detailed time-sheet and submit it along with the billing statement to the Chief Commissioner or Commissioner of Income-tax. Importantly, the concerned authority must verify that the hours claimed are proportionate to the size and quality of the report submitted. Overall, Rule 172 introduces a standardized, accountable, and transparent framework for determining audit and inventory valuation expenses, while ensuring regulatory supervision over professional billing.
Extract of Rule No. 172 of Draft Income-tax Rules, 2026
Rule 172
Guidelines for the purposes of determining expenses for audit or inventory valuation.
(1) Every Chief Commissioner of Income-tax shall for the purposes of 268(5)(i) of the Act and section 268(5)(ii) of the Act shall maintain a panel of—
(a) accountants, out of the persons referred to in section 515(3)(b) of the Act; and
(b) cost accountants, out of the persons referred to in section 268(13) of the Act.
(2) Where the Assessing Officer directs—
(a) for audit under section 268(5)(i) of the Act; or
(b) for inventory valuation under section 268(5)(ii) of the Act,
the expenses of, and incidental to, audit or inventory valuation (including the remuneration of the Accountant or Cost Accountant, qualified Assistants, semi-qualified and other Assistants who may be engaged by such Accountant or Cost Accountant), shall not be less than ₹ 3,750 and not more than ₹ 7,500 (both figures inclusive) for every hour of the period as specified by the Assessing Officer under section 268(8) or 268(9) or 268(10) of the Act, as the case may be.
(3) The period referred to in sub-rule (2) shall be specified in terms of the number of hours required for completing the report.
(4) The Accountant or Cost Accountant referred to in section 268(5)(i) or section 268(5)(ii) of the Act shall maintain a time-sheet and shall submit it to the Chief Commissioner of Income tax or Commissioner of Income-tax, along with the bill.
(5) The Chief Commissioner of Income-tax or the Commissioner of Income-tax shall ensure that the number of hours claimed for billing purposes is commensurate with the size and quality of the report submitted by the Accountant or Cost Accountant.
