CBDT amends Income Tax Rule 14 & 14B and Introduces Form No. 6D -Inventory Valuation Report

On September 27, 2023, the Central Board of Direct Taxes (CBDT) issued Notification No. 82/2023, introducing significant amendments to Income Tax Rule 14A and Rule 14B. These amendments pertain to the forms required for reporting audits and inventory valuations under section 142(2A) of the Income-tax Act, 1961. Additionally, it introduces a new form, Form No. 6D, specifically for Inventory Valuation reports under clause (ii) of section 142(2A). In this article, we will delve into the details of these changes and their implications.

Amendment to Rule 14A:

The CBDT has substituted the existing Rule 14A with a new rule. Under this new rule:

• Audits and inventory valuations required under section 142(2A) now require specific forms.
• The audit report of an assessee (clause i) shall be in Form No. 6B.
• The inventory valuation report of an assessee (clause ii) shall be in Form No. 6D.

Amendment of Rule 14B:

In addition to the changes to Rule 14A, the CBDT has also introduced Rule 14B. This new rule provides guidelines for determining expenses related to audit or inventory valuation. These guidelines mandate the Chief Commissioner to maintain a panel of accountants and cost accountants for the purposes of clause (i) and clause (ii) of sub-section (2A) of section 142. Furthermore, the expenses incurred, including remuneration, should fall within the range of three thousand seven hundred and fifty rupees to seven thousand five hundred rupees for every hour of the period specified by the Assessing Officer under sub­section (2C) of section 142.

The period referred to in these guidelines is specified in terms of the number of hours required to complete the report. Accountants or cost accountants are also required to maintain a time-sheet and submit it along with their bills.

Introduction of Form No. 6D:

Form No. 6D is a newly introduced form for Inventory Valuation reports under clause (ii) of section 142(2A) of the Income-tax Act, 1961. This form includes detailed sections covering various aspects of inventory valuation. It requires the examiner to:

• Examine the books of account and other documents related to inventory and inventory valuation.
• Conduct Inventory Valuation in compliance with the relevant provisions of the Income-tax Act 1961 and Income–tax Rules 1962.
• Obtain all necessary information and explanations for the valuation.
• Confirm the adequacy of proper books of account and other documents.
• Provide an opinion on the accuracy of the Inventory Valuation.
• Annex prescribed particulars and other required information.
• Explain any variations observed compared to disclosures in Form No. 3CD (or audited accounts) along with reasons and justifications.

Conclusion: The CBDT’s Notification No. 82/2023, dated September 27, 2023, brings noteworthy changes to Income Tax Rule 14A and introduces Rule 14B. These changes introduce specific forms for reporting audits and inventory valuations, with Form No. 6D dedicated to Inventory Valuation reports. Additionally, guidelines for determining expenses related to these processes have been laid out in Rule 14B. It is crucial for tax professionals and businesses to be aware of these amendments and ensure compliance with the new rules and reporting requirements.

Ministry of Finance
(Department of Revenue)
(Central Board of Direct Taxes)
New Delhi,

Notification No. 82/2023-Income Tax | Dated: 27th September, 2023

G.S.R. 697(E).– In exercise of the powers conferred by sub-section (2A) of section 142 read with section 295 of the Income-tax Act, 1961 (hereinafter referred to as the Act), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:––

1. Short title and commencement.–– (1) These rules may be called the Income-tax (Twenty Second Amendment) Rules, 2023.

(2) They shall come into force from the date of publication in the Official Gazette.

2. In the Income-tax Rules, 1962 (hereinafter referred to as the principal rules), for rule 14A, the following rule shall be substituted namely:––

“14A. Forms for report of audit or inventory valuation under section 142(2A).–– (1) The report of audit of the accounts of an assessee which is required to be furnished under clause (i) of sub-section (2A) of section 142 shall be in Form No. 6B.

(2) The report of inventory valuation of an assessee which is required to be furnished under clause (ii) of sub-section (2A) of section 142 shall be in Form No. 6D.”.

3. In the principal rules, for rule 14B, the following rule shall be substituted namely:––

“14B. Guidelines for the purposes of determining expenses for audit or inventory valuation. ––

(1) Every Chief Commissioner shall for the purposes of clause (i) and clause (ii) of sub-section (2A) of section 142 shall maintain a panel of ––

(i) accountants, out of the persons referred to in the Explanation to sub-section (2) of section 288; and

(ii) cost accountants, out of the persons referred to in the Explanation to section 142.

(2) Where the Assessing Officer directs ––

(i) for audit under clause (i) of sub-section (2A) of section 142 on or after the 1st day of June, 2007; or

(ii) for inventory valuation under clause (ii) of sub-section (2A) of section 142 on or after the 1^st day of April, 2023,

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 three thousand seven hundred and fifty rupees and not more than seven thousand and five hundred rupees for every hour of the period as specified by the Assessing Officer under sub­section (2C) of section 142.

(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 clause (i) or clause (ii) of sub-section (2A) of section 142 shall maintain a time-sheet and shall submit it to the Chief Commissioner or Commissioner, along with the bill.

(5) The Chief Commissioner or the Commissioner 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.”.

4. In the principal rules, in Appendix II,––

(a) in Form No. 6B:––

(i) for the heading of the Form, the following shall be substituted, namely:––

“Audit report under clause (i) of section 142(2A) of the Income-tax Act, 1961”;

(ii) in the Notes, for serial number 2 and entries relating thereto, the following serial number and entries shall be substituted, namely – “2. This report has to be given by the accountant nominated by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner of Income-tax under clause (i) of section 142(2A) of the Income-tax Act, 1961.”;

(b) after Form No. 6C, the following Form shall be inserted, namely:––

“FORM NO. 6D

[See rule 14A]

Inventory Valuation report under clause (ii) of section 142(2A) of the Income-tax Act, 1961

1. * I/We have examined the books of account and other documents with respect to inventory and inventory valuation of________________________ [name and address of the assessee] Permanent Account No. _________________ for the assessment year__________ as at______________________ .

2. * I/We have conducted Inventory Valuation in compliance with the requirements under the relevant provisions of Income-tax Act 1961 and Income–tax Rules 1962. As per the Inventory Valuation carried out by *me/ us, the opening inventory has been valued at Rs. _______________________________  (in words ______________ ) and the closing inventory has been valued at Rs. ______________________  (in words _______________ ) for the relevant period_______________ to_________________ .

3. * I/ We have obtained all the information and explanations which to the best of * my/our knowledge and belief were necessary for the purposes of the Inventory Valuation.

4. In * my/our opinion, from *my/ our examination of the books of account and other documents, it appears that proper books of account and other documents with respect to inventory have been kept by the head office, other premises and the branches of the assessee visited by * me/us, and proper data adequate for the purposes of inventory valuation have been received from branches not visited by * me/us subject to the comments given below:

(a)

(b)

__________

5. In * my/our opinion and to the best of * my/our information and according to explanations given to * me/us, the Inventory Valuation presented herein below in * my/our report is true and correct subject to comments given below:

(a)

(b)

__________

6. The prescribed particulars and such other particulars as were required by the Assessing Officer by order No.____________dated_________are annexed hereto. In * my/our opinion and to the best of *my/our information and according to explanations given to * me/us, these are true and correct.

7. Any variations observed in the Inventory Valuation Report compared to the disclosures made in Form No. 3CD (or if no Form No. 3CD has been furnished, then value as per audited accounts) have been adequately explained along with the reasons and justifications thereof.

Place …………

Date ………….

Signed

**Name of Cost Accountant __________

Address __________

Membership Number __________

UDIN __________

Notes:

1. *Delete whichever is not applicable.

2. **This report has to be given by the Cost Accountant nominated by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner of Income-tax under clause (ii) of section 142(2A) of the Income-tax Act, 1961.

3. Where any of the matters stated in this report is answered in the negative or with a qualification, the report shall state the reasons therefor.

4. The opening values have been taken from the books of account and other documents as produced by the assessee.

5. Relevant period shall be the period specified by the Assessing Officer.

ANNEXURE

Inventory Valuation Report of Cost Accountant

	Information of the Assessee
1	Address (Head Office / other premises and branches)
a.
b.
c.
…..
2.	Date of incorporation/ Date of formation / Date of birth
3.	Nature of business activity
4.	Details of principal products / services
5.	Details of books of account and other documents maintained with respect to inventory
6.	(i) Method of accounting employed with respect to inventory maintained. Indicate whether there is any change from the method of accounting employed with respect to inventory maintained in the immediately two preceding previous years
	(ii) Is there any inventory management system software in place? If so, details of the same.
7.	(i) Method of valuation of opening and closing stock of following inventory items used by the Assessee: a) Finished Goods (manufactured) b) Stock-in-trade c) Work-in-progress (WIP) d) Raw materials e) By-products f) Intermediate Products g) Jigs, Tools, and Dies h) Stores, Spares and Consumables i) Scrap j) Any other item
	(ii) State whether there is any change in the method of valuation of any of the aforesaid items as compared to the method employed in the immediately two preceding previous years
	(iii) If the answer to (ii) above is in the affirmative, specify the amount by which the profit or loss for the relevant period has been affected by such change
	(iv) During the relevant period, has there been any insurance claim relating to inventory due to fire or accident or any other reason. If so, give details.

Note: In case available, details of HSN codes and SAC code for services should be provided for principal products/ services.

8. Give summarized details of Financial Results (as per the Audited Accounts of the Assessee)

Details of Financial Results (as per the Audited Accounts of the Assessee)

S. No.	Particulars	Year under reporting	Previous Year 1	Previous Year 2
1	Turnover
2	Profit (Loss) before tax
3	Less: Taxes paid
4	Profit (Loss) after tax
5	Raw Materials Consumed
6	Opening Inventory
7	Closing Inventory
8	Average Inventory Holding Period (days) ={365/(Turnover [1]/Average Inventory)} Average Inventory = {[6]+[7]}/2
9	Average Raw Material Stock to Consumption (days)
10	Average. Stores and Spares Stock to Consumption (days)

9. In respect of items manufactured, full quantitative details of raw materials and finished products as indicated below (consolidated at entity level):

(i) Details of Raw Material (RM) for the relevant period under reporting –

S. No.	Details	Raw Material description	Unit of Measu-rement (UOM)	Opening stock	Purchases during the relevant period	Consum-ption of Raw Material during the relevant period	Raw Material sold during the relevant period	Closing stock	Other adjustments
1.	RM1
2.	RM2
3.	RM3
	….
	Others

Notes:

1. Inventory of all such raw materials that constitute top 80% of the total inventory value of raw materials should be reported item-wise separately. Inventory of all other raw materials constituting balance may be clubbed under “Others”.

2. Add number of rows depending on the number of raw materials

3. Other adjustments include Shortage/ Wastages / Rejects, etc.

(ii)(a) Quantitative details in respect of items manufactured / traded by the Assessee for the relevant period under reporting –

S. No.

Finished products/ Work-in- Progress

Descri-ption

Item Code

Unit of Measure-ment (UOM)

Opening stock

Quantity (Qty) manufa-ctured during the relevant period

Quantity purchased during the relevant period

Quantity sold during the relevant period

Quantity rejected during the relevant period

Quantitative adjustments, if any * (add reasons)

Closing stock at the end of the  relevant period

Opening Work-in- Progress

Closing Work-in- Progress

1.

Item 1

2.

Item 2

3.

Item 3

…….

Others

*(ii)(b) Quantitative adjustments –

S. No.	Finished products / Work-in-Progress	If there are quantitative adjustments in (ii)(a), furnish the detailed reasons for quantitative adjustments
1.	Item 1
2.	Item 2
3.	Item 3
	………
	Others

Notes:

1. Add number of rows depending on the number of items

2. Separate quantitative details on the above lines should be given in respect of by-products, if any.

3. Where the assessee is trading in goods, quantitative details on the above lines should be given in respect of the goods traded in.

4. Inventory of all such manufactured goods / traded goods / work-in-progress items that constitute top 80% of the value of total manufactured goods / traded goods / work-in-progress items respectively should be reported item-wise separately. Inventory of all other manufactured goods / traded goods / work-in-progress items constituting balance may be clubbed under “Others”

10.	(i) Has the assessee conducted physical verification of raw materials, stores and finished products, etc. or traded goods mentioned above?
	(ii) Details of discrepancies, if any
11.	(i) Whether valuation is in conformity with the Income Computation and Disclosure Standards (ICDS) notified under sub-section (2) of section 145 of the Income-tax Act, 1961?
	(ii) Details of discrepancies, if any

12. Details of inventory valuation for the relevant period under reporting by the Cost Accountant (wherever ICDS II is applicable) –

(i)(a) Valuation of Finished Goods

Sl.	Descri-ption	Item Code	UOM	Opening Stock					Closing Stock
				Qty	COP/ PV (Rs.)	NRV (Rs.)	Lower of (6) or (7)	Value (5) x (8) (Rs.)	Qty	COP/ PV (Rs.)	NRV (Rs.)	Lower of (11) or (12)	Value (10) x (13) (Rs.)
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)	(11)	(12)	(13)	(14)
1	Product 1
2	Product 2
3	Product 3
	………
	Total

COP: Cost of Production PV: Purchase Value

NRV: Net Realisable Value

Notes: Add or delete rows as per the number of finished products

(i)(b) Valuation of Stock-in-trade

Sl.	Descri-ption	Item Code	UOM	Opening Stock					Closing Stock
				Qty	COP/ PV (Rs.)	NRV (Rs.)	Lower of (6) or (7) (Rs.)	Value (5) x (8) (Rs.)	Qty	COP/ PV (Rs.)	NRV (Rs.)	Lower of (11) or (12) (Rs.)	Value (10) x (13) (Rs.)
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)	(11)	(12)	(13)	(14)
1	Product 1
2	Product 2
3	Product 3
	………
	Total

COP: Cost of Production

PV: Purchase Value

NRV: Net Realisable Value

Notes: Add or delete rows as per the number of products

(ii) Valuation of Work-in-Progress (WIP)

Sl.	Descri-ption	Item Code	UOM	Opening Stock					Closing Stock
				Qty	COP (Rs.)	NRV (Rs.)	Lower of (6) or (7) (Rs.)	Value (5) x (8) (Rs.)	Qty	COP (Rs.)	NRV (Rs.)	Lower of (11) or (12) (Rs.)	Value (10) x (13) (Rs.)
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)	(11)	(12)	(13)	(14)
1	WIP 1
2	WIP 2
3	WIP 3
	…….
	Total

COP: Cost of Production

Notes:

1. Add or delete rows as per the number

2. NRV here means NRV of relevant finished product less estimated completion cost.

(iii) Valuation of Raw Materials

Sl.	Descri-ption	Item Code	UOM	Opening Stock					Closing Stock
				Qty	Purchase cost (Rs.)	Repla- cement rate (Rs.)	Lower of (6) or (7) (Rs.)	Value (5) x (8) (Rs.)	Qty	Purchase cost (Rs.)	Repla- cement rate (Rs.)	Lower of (11) or (12) (Rs.)	Value (10) x (13) (Rs.)
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)	(11)	(12)	(13)	(14)
1	RM 1
2	RM 2
3	RM 3
	…..
	Total

Note: Add or delete rows as per the number of Raw Material items

(iv) Valuation of By-Products

Sl.	Description	Item Code	UOM	Opening Stock			Closing Stock
				Quantity	NRV (Rs.)	Value (5)x(6) (Rs.)	Quantity	NRV (Rs.)	Value (8)x(9) (Rs.)
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)
1	By-Product 1
2	By-Product 2
3	By-Product 3
	……
	Total

NRV: Net Realisable Value

Note: Add/Delete Rows as per the number of By-Products.

(v) Valuation of Intermediate Products (IMP)

Sr.	Descri-ption	Item Code	UOM	Opening Stock					Closing Stock
				Qty	COP (Rs.)	NRV (Rs.)	Lower of (6) or (7) (Rs.)	Value (5) x (8) (Rs.)	Qty	COP (Rs.)	NRV (Rs.)	Lower of (11) or (12) (Rs.)	Value (10) x (13) (Rs.)
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)	(11)	(12)	(13)	(14)
1	IMP 1
2	IMP 2
3	IMP 3
	…..
	Total

Note:

1. Add/Delete Rows as per the number of Intermediate Products

2. Intermediate products include only such products which are at intermediate stage and not included elsewhere.

(vi) Valuation of Others

Description	Opening Value (Rs.)	Closing Value (Rs.)
Jigs, Tools, and Dies
Stores, Spares and Consumables
Scrap
Others
Total

(vii) Summary of Inventory Valuation as on________

Sl.	Particulars	Value as per Form No. 3CD (Rs.) (If Form No. 3CD not furnished, then value as per audited accounts)		Value as per Cost Accountant (Rs.)		Variation if any (Rs.)
		Opening	Closing	Opening	Closing	Opening	Closing
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)
						(5) – (3)	(6) – (4)
1	Finished Goods
2	Stock- in-Trade
3	Work-in-Progress
4	Raw Material
5	By-Products
6	Intermediate products
7	Jigs, Tools, and Dies
8	Stores, Spares and Consumables
9	Scrap
10	Others
11	Total
12	Impact on Profit or Loss
13	Impact on Income Tax

(viii) Details of inventory valuation carried out by the Cost Accountant

	Inventory Items	Method of valuation used by the Cost Accountant		In case of variation in the method adopted by the assessee, state reasons for variations in quantity, rates and value along with method adopted by the Cost Accountant for various items of inventory giving full justification.
		Opening stock	Closing stock
a.	Finished Goods (manufactured)
b.	Stock-in-trade
c.	Work-in-progress (WIP)
d.	Raw materials
e.	By-products
f.	Intermediate Products
g.	Jigs, Tools, and Dies
h.	Stores, Spares and Consumables
i.	Scrap
j.	Any other item

(ix) Any other relevant comment, observation or qualification of the Cost Accountant

Notes:

1. The item level details shall be maintained by the Assessee and the Cost Accountant and produced if required by the Assessing Officer.

2. Income Computation and Disclosure Standard II shall be applied for valuation of inventories, except:

(a) Work-in-progress arising under �construction contract’ including directly related service contract which is dealt with by the Income Computation and Disclosure Standard on construction contracts;

(b) Work-in-progress which is dealt with by other Income Computation and Disclosure Standard;

(c) Shares, debentures and other financial instruments held as stock-in-trade which are dealt with by the Income Computation and Disclosure Standard on securities;

(d) Producers’ inventories of livestock, agriculture and forest products, mineral oils, ores and gases to the extent that they are measured at net realisable value;

13. Details of inventory valuation for the relevant period under reporting by the Cost Accountant (wherever ICDS II is not applicable) –

A. Inventory valuation for Assessees engaged in the Construction Contracts which are dealt with by the ICDS III

(i) Valuation of Completed Units Ready for Sale

Sl.	Description	Type of Completed units	Subtype if any	Closing Stock				Opening Stock
				Qty	Cost of the unit for each type (Rs.)	NRV (Rs.)	Value [(5) X lesser of ((6) or (7))](Rs.)	Qty	Cost of the unit for each type (Rs.)	NRV (Rs.)	Value [(9) X lesser of ((10) or (11))] (Rs.)
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)	(11)	(12)
1	Project 1
2	Project 2
3	Project 3
	…..
	Total

Notes:

1. Type means BHK size/Affordable/ Premium/Commercial etc. which is identifiable as different sale unit

2. Completed Units mean Plots/Flats/commercial units/Villas/Floors which are ready for sale and have been included in inventory as such

3. The valuation of Land (Shown separately in Inventory Valuation in financials) and Development Rights can be shown here, if required.

(ii) Valuation of Construction Work-in-progress

Sl.	Description	Closing Stock				Opening Stock
		%age Completion	Total to-date construction cost(Rs.)	Cost as per recognised revenue (Rs.)	Value of Work- in- progress [(4)-(5)] (Rs.)	%age Completion	Total to-date construction cost (Rs.)	Cost as per recognised revenue (Rs.)	Value of Work-in- progress [(8)-(9)] (Rs.)
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)
1	Project 1
2	Project 2
3	Project 3
	…..
	Total

Note: Add number of rows depending on the number of Projects

(iii) Valuation of construction materials

Sl.	Description	Item Code	UOM	Opening Stock					Closing Stock
				Qty	Purchase cost (Rs.)	Repla- cement rate (Rs.)	Lower of (6) or (7) (Rs.)	Value (5) x (8) (Rs.)	Qty	Purchase cost (Rs.)	Repla- cement rate (Rs.)	Lower of (11) or (12) (Rs.)	Value (10) x (13) (Rs.)
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)	(11)	(12)	(13)	(14)
1	Material 1
2	Material 2
3	Material 3
	…..
	Total

Note: Add number of rows depending on the number of Construction Materials

(iv) Valuation of construction fittings, supporting equipment and others

Sl.	Description	Item Code	UOM	Opening Stock					Closing Stock
				Qty	Purchase cost (Rs.)	Repla- cement rate (Rs.)	Lower of (6) or (7) (Rs.)	Value (5) x (8) (Rs.)	Qty	Purchase cost (Rs.)	Repla- cement rate (Rs.)	Lower of (11) or (12) (Rs.)	Value (10) x (13) (Rs.)
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)	(11)	(12)	(13)	(14)
1	Item 1
2	Item 2
3	Item 3
	…..
	Total

Note: Add number of rows depending on the number of Items

(v) Summary of Inventory Valuation for Construction Contracts as on______

Sl.	Particulars	Value as per Form No. 3CD (If Form No. 3CD not furnished, then value as per audited accounts) (Rs.)		Value as per Cost Accountant (Rs.)		Variation if any (Rs.)
		Opening	Closing	Opening	Closing	Opening	Closing
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)
						(5)-(3)	(6)-(4)
1	Completed units ready for sale
2	Construction Work-in-progress
3	Construction Materials
4	Construction Fittings, supporting equipment and Others
	Total
	Impact on Profit or Loss
	Impact on Income Tax

Note: Specify the amount by which profit or loss would be affected by the changed valuation.

(vi) Details of inventory valuation carried out by the Cost Accountant

	Inventory Items	Method of valuation used by the Cost Accountant		In case of variation in the method adopted by the assessee, state reasons for variations in quantity, rates and value along with method adopted by the Cost Accountant for various items of inventory giving full justification.
		Opening stock	Closing stock
a.	Completed units ready for sale
b.	Construction Work-in-progress
c.	Construction Materials
d.	Construction Fittings, supporting equipment and Others

Note: Specify the method used to determine the stage of completion of contracts in progress

(vii) Any other relevant comment, observation or qualification of the Cost Accountant

B. Inventory valuation for Assessees engaged in the trading of Securities which are dealt with by the ICDS VIII. (i)(a) Valuation of Listed Shares held as Stock-in-trade

Sr.	Description	Opening Stock					Closing Stock
		Qty	AC (Rs.)	NRV (Rs.)	Lower of (4) or (5) (Rs.)	Value (3)X (6) (Rs.)	Qty	AC (Rs.)	NRV (Rs.)	Lower of (9) or (10) (Rs.)	Value (8)X (11) (Rs.)
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)	(11)	(12)
1	Share 1
2	Share 2
3	Share 3
	…..
	Total

AC: Actual Cost

NRV: Net Realisable Value

Note: Add number of rows depending on the number of shares

(i)(b) Valuation of Unlisted Shares held as Stock-in-trade

Sl.	Description	Opening Stock					Closing Stock
		Qty	AC (Rs.)	NRV (Rs.)	Lower of (4) or (5) (Rs.)	Value (3)X (6) (Rs.)	Qty	AC (Rs.)	NRV (Rs.)	Lower of (9) or (10) (Rs.)	Value (8)X (11) (Rs.)
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)	(11)	(12)
1	Share 1
2	Share 2
3	Share 3
	…..
	Total

AC: Actual Cost

NRV: Net Realisable Value

Note: Add number of rows depending on the number of shares

(ii) Valuation of Debt Securities held as Stock-in-trade

Sl.	Description	Opening Stock					Closing Stock
		Qty	AC (Rs.)	NRV (Rs.)	Lower of (4) or (5) (Rs.)	Value (3) X (6) (Rs.)	Qty	AC (Rs.)	NRV (Rs.)	Lower of (9) or (10) (Rs.)	Value (8) X (11) (Rs.)
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)	(11)	(12)
1	Debt Security 1
2	Debt Security 2
3	Debt Security 3
	……
	Total

AC: Actual Cost

NRV: Net Realisable Value

Note: Add number of rows depending on the number of Debt securities

(iii) Valuation of Convertible Securities held as Stock-in-trade

Sl.	Description	Opening Stock					Closing Stock
		Qty	AC (Rs.)	NRV (Rs.)	Lower of (4) or (5) (Rs.)	Value (3)X (6) (Rs.)	Qty	AC (Rs.)	NRV (Rs.)	Lower of (9) or (10) (Rs.)	Value (8)X (11) (Rs.)
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)	(11)	(12)
1	Convertible Security 1
2	Convertible Security 2
3	Convertible Security 3
	…..
	Total

AC: Actual Cost

NRV: Net Realisable Value

Note: Add number of rows depending on the number of Convertible Securities

(iv) Valuation of Any other security held as Stock-in-trade

Sl.	Description	Opening Stock					Closing Stock
		Qty	AC (Rs.)	NRV (Rs.)	Lower of (4) or (5) (Rs.)	Value (3)X (6) (Rs.)	Qty	AC (Rs.)	NRV (Rs.)	Lower of (9) or (10) (Rs.)	Value (8) X (11) (Rs.)
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)	(11)	(12)
1	Any other Security 1
2	Any other Security 2
3	Any other Security 3
	……
	Total

AC : Actual Cost

NRV: Net Realisable Value

Note: Add number of rows depending on the number of Any other Securities

(v) Summary of Inventory Valuation for Shares, Debentures and other Financial Instruments held as stock- in-trade as on_________

Sl.	Category	Value as per Form No. 3CD (If Form No. 3CD not furnished, then value as per audited accounts) (Rs.)		Value as per Cost Accountant (Rs.)		Variation if any (Rs.)
		Opening	Closing	Opening	Closing	Opening	Closing
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)
						(5) – (3)	(6) – (4)
1	Listed Shares
2	Unlisted Shares
3	Debt Securities
4	Convertible Securities
5	Any other Security
	Total
	Impact on Profit or Loss
	Impact on Income Tax

Note: Specify the amount by which profit or loss would be affected by the changed valuation.

(vi) Details of inventory valuation carried out by the Cost Accountant

	Inventory Items	Method of valuation used by the Cost Accountant		In case of variation in the method adopted by the assessee, state reasons for variations in quantity, rates and value along with method adopted by the Cost Accountant for various items of inventory giving full justification.
		Opening stock	Closing stock
a.	Listed Shares
b.	Unlisted Shares
c.	Debt Securities
d.	Convertible Securities
e.	Any other Security

Note: Specify the method used to determine the Actual Cost and Net Realisable Value for each category of financial instruments.

(vii) Any other relevant comment, observation or qualification of the Cost Accountant

Note: Securities not listed on a recognised stock exchange; or listed but not quoted on a recognised stock exchange with regularity from time to time shall be valued at actual cost initially recognised.

C. Inventory valuation of livestock, agriculture and forest products, mineral oils, ores and gases, except those held by the trader of such inventories

(i) Valuation of Inventory of Livestock

Sl.	Description	UOM	Closing Stock			Opening Stock
			Quantity	NRV (Rs.)	Value (Rs.) (4)X(5)	Quantity	NRV (Rs.)	Value (Rs.) (7)X(8)
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)
1	Livestock 1
2	Livestock 2
3	Livestock 3
	…..
	Total

NRV: Net Realisable Value

Note: Add number of rows depending on the number of Livestock

(ii) Valuation of Inventory of Agriculture and Forest Produce

Sl.	Description	UOM	Closing Stock			Opening Stock
			Quantity	NRV (Rs.)	Value (Rs.) (4)X(5)	Quantity	NRV (Rs.)	Value (Rs.) (7) X (8)
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)
1	Produce 1
2	Produce 2
3	Produce 3
	……
	Total

NRV: Net Realisable Value

Note: Add number of rows depending on the number of produce

(iii) Valuation of Inventory of Mineral Oils, Ores and Gases

Sl.	Description	UOM	Closing Stock			Opening Stock
			Quantity	NRV (Rs.)	Value (Rs.) (4)X(5)	Quantity	NRV (Rs.)	Value (Rs.) (7) X (8)
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)
1	Product 1
2	Product 2
3	Product 3
	…..
	Total

NRV: Net Realisable Value

Note: Add number of rows depending on the number of Products

iv. Summary of Comparison as on

Sl.	Category	Value as per Form No. 3CD (If Form No. 3CD not furnished, then value as per audited accounts) (Rs.)		Value as per Cost Accountant (Rs.)		Variation if any (Rs.)
		Opening	Closing	Opening	Closing	Opening	Closing
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)
						(5) – (3)	(6) – (4)
1	Livestock
2	Agriculture and Forest Produce
3	Mineral oils, Ores and Gases
	Total
	Impact on Profit or Loss
	Impact on Income Tax

Note: Specify the amount by which profit or loss would be affected by the changed valuation.

(v) Details of inventory valuation carried out by the Cost Accountant

	Inventory Items	Method of valuation used by the Cost Accountant		In case of variation in the method adopted by the assessee, state reasons for variations in quantity, rates and value along with method adopted by the Cost Accountant for various items of inventory giving full justification.
		Opening stock	Closing stock
a.	Livestock
b.	Agriculture and Forest Produce
c.	Mineral oils, Ores and Gases

(vi) Any other relevant comment, observation or qualification of the Cost Accountant

Place __________

Date __________

Signed

Name of Cost Accountant __________

Address __________

Membership Number __________

UDIN __________”.

(Jivitesh Anand)
Under Secy. (Tax Policy and Legislation Division)

Note.- The principal rules were published in the Gazette of India, Extraordinary, Part-II, Section 3, Sub-section (ii) vide notification number S.O. 969 (E), dated the 26th March, 1962 and was last amended vide notification number G.S.R. 685(E) dated 25th September, 2023.