The Institute of Cost Accountants of India (ICMAI) has said that, Cost Accountants to undertake Inventory Valuation under Section 142(2A) of the Income Tax Act.
The ICMAI is a statutory body set up under an Act of Parliament under the administrative control of Ministry of Corporate Affairs, Govt. of India.
The Institute is headquartered in Kolkata having four Regional Councils at Kolkata, Delhi, Mumbai and Chennai, 114 Chapters in India and 11 Overseas Centres. The Institute is the largest Cost & Management Accounting body in the world, having approximately 5,00,000 students and 90,000 qualified CMAs either in practice or in employment all over the globe. The Institute is a founder member of International Federation of Accountants (IFAC), Confederation of Asian and Pacific Accountants (CAPA) and South Asian Federation of Accountants (SAFA).
The Union Budget 2023 has mandated the assessing officers of the Income Tax Department to get the valuation of inventory done if he has doubts about the correctness of the accounts and for the purpose of obtaining full information in respect of the income or loss of any person. The assessing officer, however, has to seek permission from a senior official in the capacity of a principal chief commissioner, chief commissioner, or commissioner before going ahead with the cost audit.
In this regard, the Government on the 27th of September, 2023 published form 6D which lays down the detailed format in which this work is to be carried out.
The Institute of Cost Accountants of India is working in sync with the Government in this field. Firstly, when the draft form for Inventory Valuation was placed for public opinion the Institute studied the same elaborately and submitted its observations or inclusion that may be made in the same. The submission of the Institute was vetted and some points were included in the final notification on the same.
A webinar was organized by the Institute, the theme being âDiscussion on Inventory Valuation by Cost Accountants â Form 6Dâ which discussed in detail the form 6D as introduced by The Income-tax (Twenty-Second Amendment) Rules, 2023 were notified by the Central Board of Direct Taxes (CBDT). This Form 6D is to be furnished by a cost accountant in the prescribed format to the Assessing Officer (AO) if the AO has directed the assessee to have their inventory valued by a cost accountant under clause (ii) of section 142(2A) of the Act and there are some specific requirements in this respect which were discussed in this webinar.
The Institute is also training its members in building their capacity to work in tandem with the Government. On the 4th and 5th of September, webinars on Inventory valuation and Direct Tax was conducted with the nomenclature âInsights of ICDSs with inventory valuation in the backgroundâ. The webinar was a 2-day activity with a detailed discussion on various methods of inventory valuation, Problems that are faced while valuation on inventory, and how valuation is to be taken up industry-wise depending on the nature of inventory. The draft form 6C which was placed for public observation was also discussed in detail. Various observations and suggestions were also discussed.
In the month of August also, the Institute undertook a very critical and meaningful webinar on 22.08.2023 The topic for the session was âInventory Valuation under Income Tax Act Mission Towards Transparency with CMAsâ. In this Webinar points like: (i) Amendment of Section 142(2A) of Income Tax Act: Benefit to Exchequer and to all other stakeholders (ii)applicability â whether it is applicable to companies only and the needs that are required to be taken care of by cost auditors while finalizing cost audit reports (iii) the process through which the CMAs can act skillfully in plugging the leakages in inventory valuation (iv) whether the amended section 142(2A) can create a sense of product level costing among the organizations leading to efficient & effective utilization of resources were discussed.
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