Companies will need to give report on inventory valuation in case of audit

Aug 17, 2023

Synopsis
The Central Board of Direct Taxes on Wednesday released the 13 page draft form 6C, which will be used to report the inventory valuation in case of special audit of accounts directed by assessing officer. The businesses will also have to provide valuation of raw material, date of purchase, use of the inventory, valuation of by-products and cost of contract by the company.

Businesses will have to furnish a detailed report on valuation of inventories including shares, debentures, debt securities, acquisition and other financial instruments held as stock-in-trade in case they are asked to get their account audited by the income tax officials.

The Central Board of Direct Taxes on Wednesday released the 13 page draft form 6C, which will be used to report the inventory valuation in case of special audit of accounts directed by assessing officer.

The businesses will also have to provide valuation of raw material, date of purchase, use of the inventory, valuation of by-products and cost of contract by the company.

The businesses will also have to provide details of the method of accounting employed and have to indicate whether there is any change from the method of valuation employed with respect to inventory maintained in the immediately two preceding previous years, according to the draft put out by CBDT to elicit public comments.

According to the Sub-section (2A) of Section 142(2A) of income tax Act, if at any stage of the proceedings, the Assessing Officer, have doubts about the correctness of the accounts, he may direct the assessee to get his accounts audited by an accountant, and to furnish report as per rules.

[The Economic Times]