Hi R. Kandasubramanian,
This Income Computation and Disclosure Standard is applicable for computation of income chargeable under the head โProfits and gains of business or professionโ or โIncome from other sourcesโ and not for the purpose of maintenance of books of accounts. If there is any conflict between the provisions of the Income-tax Act, 1961 ICDS, then provisions of the Act shall prevail. Valuation of Inventories under ICDS is similar to Valuation under AS-2 except for the 2 things mentioned below
1. Standard Cost method of valuation is allowed under AS-2 for valuation of inventories however same is not accepted as valuation method under AS-2.
2. In case of dissolution of a partnership firm or association of person or body of individuals, whether business is discontinued or not, the inventory on the date of dissolution shall be valued at the net realizable value. Whereas in case of AS-2 if is business is continued then valuation can be done as cost or NRV whichever is lower.
R. KANDASUBRAMANIAN commented
about 5 years ago
Respected Sir
thanks for your response
in the case of ICDS, it is stated that stock of inventory includes expenses and also includes VAT etc. As such, how to reconcile closing inventory as per BS and ICDS
at present, not included VAT in Closing Inventory
Shreedhar Sutar commented
about 5 years ago
Dear Sir,
Section 145 of the income tax states inventory valuation should be done inclusive of taxes whereas AS 2 values inventory excluding AS-2. But the same is revenue neutral. The presentation only differs however impact on the profit & loss account is same.
R. KANDASUBRAMANIAN commented
about 5 years ago
Dear Sir
thanks for your immediate reply