Form explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Form No. 101 is the report a nominated cost accountant gives when the Assessing Officer directs an assessee to get its inventory valued. It records the assessee's particulars, the method of valuation, the quantities and values of stock, and, for certain types of business, separate valuation tables. This guide explains the form as printed in the Income-tax Rules, 2026 (G.S.R. 198(E), notified on 20 March 2026), read with the amending notifications issued up to 22 September 2026.
Rule 171(2) says the report of inventory valuation required to be furnished under section 268(5)(ii) "shall be in Form No. 101". The report is given by the Cost Accountant nominated by the senior tax authority; the relevant period is the period specified by the Assessing Officer (Note 5). The section, not the rule, fixes the time: the report goes to the Assessing Officer within the period he specifies, with extensions, not more than six months in all from the end of the month in which the direction is received.
The direction behind the report
Section 268(5)(ii) of the Income-tax Act, 2025 allows the Assessing Officer, in the circumstances in the sub-section and after hearing the assessee, with previous approval of the senior authority, to direct the assessee to get the inventory valued by a cost accountant and to furnish a report in the prescribed form, signed and verified by that cost accountant, with the prescribed particulars and any further particulars the Assessing Officer asks for. The cost accountant is nominated by the Principal Chief Commissioner, Chief Commissioner, Principal Commissioner or Commissioner under sub-section (6). The period for furnishing is in sub-sections (8) to (10), and the expenses are in sub-section (11); the section is explained in sections 268 to 272.
Rule 171(2) names the form. The related rules on verification and expenses are in rules 168 to 172. The audit report on the same direction is Form No. 100.
If you receive an inventory direction, our books of accounts compliance team can help you assemble the stock records, item codes and valuation workings for the cost accountant.
The report
The cost accountant states, with name and Permanent Account Number, that the books of account and other documents on inventory and its valuation for the tax year as at the stated date have been examined, and that the valuation was done in compliance with the relevant provisions of the Act and the Income-tax Rules, 2026. The opening and closing inventory values are stated in figures and words for the relevant period. The report then covers:
- that all information and explanations needed were obtained, as far as the signatory knows and believes;
- whether proper books and documents on inventory have or have not been kept at the head office, other premises and branches visited, and proper data received from branches not visited, subject to comments;
- that the valuation presented is true and correct, subject to comments;
- that the prescribed particulars and the particulars required by the Assessing Officer by the stated order number and date are annexed; and
- that variations compared with the disclosures in Form No. 26 (or, if no Form No. 26 was furnished, the value per audited accounts) have been adequately explained with reasons.
The signature block gives name, member registration number, PAN, UDIN if any, name of the proprietorship or firm and firm registration number.
Notes to the report
Note 2 says the report has to be given by the Cost Accountant nominated under section 268(5)(ii). Note 3 requires reasons where any matter is answered in the negative or with a qualification. Note 4 says the opening values are taken from the books of account and documents produced by the assessee. Note 5 says the relevant period is the period specified by the Assessing Officer.
The annexure
| Part | Rows | What it asks |
|---|---|---|
| A: Particulars of the assessee | 1 to 9 | Name; address of head office, other premises and branches; PAN; date of incorporation, formation or birth; nature of business; principal products or services (with HSN or SAC codes where available); email ID; contact number; tax year |
| B: Inventory Valuation Report of Cost Accountant | 1 to 3 | Books and documents on inventory; method of accounting for inventory and any change in the two preceding years; whether inventory management software exists and its details; method of valuing opening and closing stock for finished goods, stock-in-trade, work-in-progress, raw materials, by-products, intermediate products, jigs, tools and dies, stores, spares and consumables, scrap and any other item; any change and its effect on profit or loss; any insurance claim on inventory |
| B | 4 | Summarised financial results from the audited accounts for the year under reporting and the two preceding years: turnover, profit before and after tax, raw materials consumed, opening and closing inventory, average inventory holding period, and average raw material and stores and spares stock to consumption in days |
| B | 5 | For manufactured items, quantitative details at entity level: raw materials (opening, purchases, consumption, sales, closing, other adjustments); finished products and work-in-progress (quantities opening, manufactured, purchased, sold, rejected, adjusted, closing); reasons for quantitative adjustments |
| B | 6 and 7 | Physical verification and discrepancies; whether the valuation conforms to the Income Computation and Disclosure Standards notified under section 276(2), and discrepancies |
| B | 8 | Inventory valuation by the Cost Accountant, wherever "ICDS II" applies, item by item |
| B | 9 | Inventory valuation where "ICDS II" is not applicable: A for construction contracts, B for securities held as stock-in-trade, C for livestock, agriculture and forest products, mineral oils, ores and gases |
The three headings in row 9 are printed with the names of the standards: A, "Construction Contracts which are dealt with by the ICDS III"; B, "the trading of Securities which are dealt with by the ICDS VIII"; and C, inventory of livestock, agriculture and forest products, mineral oils, ores and gases, "except those held by the trader of such inventories". The standards themselves are not set out in the form, and this article does not explain them.
Row 9 in detail
| Head | What the tables ask |
|---|---|
| A: Construction contracts | Completed units ready for sale by project and type (quantity, cost of the unit, net realisable value, value of the lesser, for closing and opening stock); construction work-in-progress (percentage of completion, total to-date construction cost, recognised revenue, value of work-in-progress); further items with a comment or qualification by the Cost Accountant |
| B: Securities as stock-in-trade | Listed shares, unlisted shares, debt securities, convertible securities and any other security (quantity, actual cost, net realisable value, the lower of the two, and value, for opening and closing); a summary comparing the value per Form No. 26 (or audited accounts) with the Cost Accountant's value, with the impact on profit or loss and on income tax; the method used for each category, with the method for actual cost and net realisable value specified under Note 12(iv) |
| C: Livestock, agriculture and forest produce, mineral oils, ores and gases | Quantity, net realisable value and value for opening and closing stock of each category; a comparison with the value in Form No. 26 (or the audited accounts) giving variation, the impact on profit or loss and on income tax; the method used by the Cost Accountant, with reasons for variation from the assessee's method |
Notes to the annexure
Notes 1 to 3 cover names, address elements and codes. Note 4 says that raw materials that constitute the top 80% of the total value of raw material inventory are to be reported item-wise and the balance may be clubbed as "Others"; Note 5 applies the same approach to manufactured or traded goods and work-in-progress, with by-products shown separately. Note 6 expands cost of production, purchase value and net realisable value, says that item-level details are maintained by the assessee and the Cost Accountant and produced if the Assessing Officer requires, and lists the exceptions to the standard in row 8. Notes 7 to 13 explain the entries in rows 8 and 9, and Note 14 says amounts are in rupees unless otherwise provided.
An example
Marlowe Components Private Limited receives a direction to get its inventory valued. The Assessing Officer specifies the period. The nominated cost accountant opens Form No. 101, records the company's particulars in Part A, then states the valuation methods in row 3 and fills the quantitative tables in row 5. The company also develops housing plots; its plots go into row 9, Head A, while the manufactured items stay in rows 5 and 8. The cost accountant then explains any variation from the value in the company's Form No. 26.
Need help with an inventory valuation direction?
The form asks for item-level data and a comparison with the earlier tax audit or audited accounts. Our books of accounts compliance team can help you prepare the stock records and reconcile them before the cost accountant starts.
Key takeaways
- Form No. 101 is the inventory valuation report under section 268(5)(ii) and rule 171(2).
- It is given by a cost accountant nominated by the senior tax authority, for the period the Assessing Officer specifies.
- The time limit comes from section 268, with a six-month ceiling from the end of the month in which the direction is received.
- Part B covers valuation methods, quantities, physical verification and, in row 9, construction contracts, securities and producers' inventories.
- Variations from Form No. 26 (or audited accounts) must be explained.
Read next
- Rules 168 to 172: verification, notices and audit expenses
- Form No. 119: application to the Dispute Resolution Committee
- Form No. 100: audit report under section 268(5)
- Form No. 26: the tax audit report, Parts A, B and C
Disclaimer: Based on the Income-tax Rules, 2026 (G.S.R. 198(E), notified on 20 March 2026), read with the amending notifications issued up to 22 September 2026, as consulted on 4 October 2026. It explains the words of the forms and rules only; later notifications, the forms and utilities on the e-filing portal, circulars and the way the tax authorities apply these provisions should be checked. This article is general information, not legal advice; check the official text before acting.