To prevent the deferral of taxes through undervaluation of inventory, the income tax department has come out with a draft form for various categories of businesses to report the valuation of their inventories, including equity and debt securities, livestock or other raw materials, by a cost accountant on the order of a tax officer.
In order to protect revenue’s interest and to prevent the deferral of taxes through undervaluation of inventory, a tax officer has been empowered from this year to order for inventory valuation from a cost accountant at any stage of the proceedings pending before her having regard to the nature and complexity of the accounts, volume of the accounts, doubts about the correctness of the accounts, multiplicity of transactions in the accounts or specialised nature of business activity.
Companies will need to give report on inventory valuation in case of audit
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