Form 101: Inventory valuation report under section 268(5)
Source checked 21 October 2026 · Original author: Finin2min Editorial Desk
Purpose, person and period
Inventory valuation report under section 268(5).
The nominated Cost Accountant provides Form 101, reconciling quantities and valuation against Form 26 or audited accounts and explaining each difference, rather than merely certifying an inventory total.
Period gate: This numbered form belongs to the Income-tax Rules, 2026, effective 1 April 2026. The predecessor 6D is a concordance, not permission to change an earlier-year filing into a new-law form. For earlier periods, use the applicable 1961 Act form and saved procedure.
Controlling rule and source pages
Rule 171; Section 268(5). Physical PDF pp 604-617; printed Gazette pp 2136-2149.
Rule 171 — connected rule text
171. Forms for report of audit or inventory valuation under section 268(5). — (1) The report of audit of the accounts of an assessee, which is required to be furnished under section 268(5)(i), shal l be in Form No. 100. (2) The report of inventory valuation of an assessee, which is required to be furnished under section 268(5)(ii), shall be in Form No. 101.
Completed field illustration
Fictional data, not for filing. A neutral cost-accountant field model values one traded inventory item and quantifies a difference from the assessee’s closing valuation.
| Form field / block | Completed fictional entry |
|---|---|
| Report / AO direction / period | MODEL-DIRECTION-101, hypothetical / 1 April 2026 to 31 March 2027, assumed directed period |
| Annexure Part A: assessee / PAN / business / address | Example Trading Ltd / synthetic ZZZCE0000Z / traded pumps / 10 Model Road, Pune |
| Part B: books / accounting / software | Stock, purchases and sales ledgers / mercantile, no prior-method change assumed / model inventory system |
| Quantitative stock bridge | Opening 100 units + purchases 500 - sales 450 = closing 150; no rejected units or adjustments |
| Row 8(a)(ii): opening stock cost / NRV / value | 100 units / Rs 100 cost / Rs 120 NRV / lower Rs 100 / value Rs 10,000 |
| Row 8(a)(ii): closing stock cost / NRV / value | 150 units / Rs 100 cost / Rs 90 NRV / lower Rs 90 / value Rs 13,500 |
| Row 8(g): assessee / cost-accountant closing values | Rs 15,000 / Rs 13,500 / variation minus Rs 1,500 |
| Impact on profit / income-tax impact | Model profit decreases Rs 1,500 if opening value is unchanged; tax effect requires the actual complete tax computation, not a universal rate |
| Physical verification / ICDS / other schedules | Assumed count agrees; ICDS II trading branch selected; manufacturing, construction, securities and producer-NRV branches not applicable |
| Professional / signature / UDIN | MODEL COST ACCOUNTANT ROLE / NOT SIGNED / none issued |
This illustrates the named fields, not every possible schedule. Use the complete official extract for additional applicable fields, annexures and verification. “Not signed” means no professional certification or authority action has occurred.
Reconcile the example
- 100+500-450=150 units; opening 100×100=10,000.
- Closing 150×min(100,90)=13,500.
- 13,500 - 15,000 = -1,500 inventory and profit variation when other figures are unchanged.
Form 101 is given by the Cost Accountant nominated under section 268(5)(ii). It is distinct from the special audit in Form 100; category-specific inventory schedules and valuation standards must not be applied indiscriminately.
Prepare, furnish and retain
- Use the form identity and period above, then determine the person who prepares, issues or verifies it from Rule 171. An authority-issued order is not an applicant filing.
- Collect the records that support the actual fields in the example; keep any mandatory schedules and annexures specified in the complete source form.
- Reconcile dates, amounts, units and identifiers to the underlying records. Preserve the applicable rule version and any later correcting notification.
- Where the rule prescribes electronic furnishing, use the current official utility/schema and authorised verification. A local PDF does not produce a portal acknowledgement.
- Retain the submitted version, supporting schedules and actual acknowledgement or issued certificate/order, as applicable. This fictional model supplies none of those evidential outcomes.
Download the correct documents
Official Form 101 source extract Filled sample — fictional field illustration
The official extract preserves source pages; later amendments are supplied with affected forms. Read the April corrigendum where its printed-page corrections apply. The filled field illustration is an educational model and cannot be filed.
Primary sources
Questions readers ask
Does this sample prove approval, filing or a professional conclusion?
No. It completes the named fields using synthetic facts. It has no real signature, DSC, approval or acknowledgement.
Can I use the legacy form number for a current tax-year obligation?
Establish the governing period first. A predecessor number is a cross-reference; earlier-year procedures and current-year forms must be kept distinct.