Form 101: Inventory Valuation Report Under Section 268(5)(ii) of the Income-Tax Act, 2025 – A Comprehensive Guide
Overview and Background
The Income-tax Act, 2025 has introduced a revised framework governing special inventory valuation proceedings, replacing the earlier provisions under the Income-tax Act, 1961. As part of this legislative overhaul, Form 101 has been introduced under the Income-tax Rules, 2026, superseding the erstwhile Form 6D that was prescribed under Rule 14A of the Income-tax Rules, 1962.
The table below provides a quick cross-reference between the old and new legal framework:
| Particulars | Old Framework | New Framework |
|---|---|---|
| Form Name | Form 6D | Form 101 |
| Governing Rules | I.T. Rules, 1962 | I.T. Rules, 2026 |
| Applicable Section | Section 142(2A)(ii), Income-tax Act, 1961 | Section 268(5)(ii), Income-tax Act, 2025 |
| Applicable Rule | Rule 14A | Rule 171 |
This guide consolidates the official FAQs and the comprehensive explanatory note released by the Income Tax Department, Ministry of Finance, Government of India, covering every significant aspect of Form 101 — from its purpose and structure to filing obligations, document requirements, and key revisions.
What Is Form 101? – Purpose and Legal Basis
Form 101 is a statutory Inventory Valuation Report that must be furnished by a qualified Cost Accountant, acting upon a formal direction issued by the Assessing Officer (AO). Such a direction can only be issued after obtaining prior approval from one of the following senior authorities:
- Principal Chief Commissioner of Income-tax
- Chief Commissioner of Income-tax
- Principal Commissioner of Income-tax
- Commissioner of Income-tax
The legal basis for this direction is Section 268(5)(ii) of the Income-tax Act, 2025.
Important Note: The primary objective of Form 101 is to ensure that inventories held by the assessee are valued accurately and in conformity with both the provisions of the Income-tax Act, 2025, and the applicable Income Computation and Disclosure Standards (ICDS), so that the correct taxable income is determined during assessment proceedings.
This form plays a pivotal role in situations where the AO has reason to believe that the inventory valuation adopted by the assessee may not reflect the true and fair position, necessitating an independent, professional examination.
Who Is Required to File Form 101?
The obligation to furnish Form 101 is specifically triggered — it does not apply universally to all assessees.
Filing Obligation
Form 101 must be filed by:
- Every assessee in respect of whom the AO has issued a direction for independent inventory valuation under
Section 268(5)(ii)of the Income-tax Act, 2025.
Role of the Cost Accountant
- The valuation report must be prepared, certified, and signed by a Cost Accountant who has been nominated by the competent authority under
Section 268(5)(ii). - The Cost Accountant bears the responsibility of providing a true and fair statement of inventory valuation, derived from a thorough examination of the assessee's books of account, financial records, and all supporting documentation.
- It is not sufficient to merely rely on figures provided by the assessee — the Cost Accountant must independently verify and validate the inventory positions.
When Must Form 101 Be Filed? – Frequency and Due Date
A critical feature of Form 101 is that it is not a routine or recurring filing. Unlike annual returns or tax audit reports, this form is event-driven and occasion-specific.
Triggering Event
Form 101 becomes applicable only for the tax year in which the AO issues a formal direction for inventory valuation under Section 268(5)(ii). There is no obligation to file this form in any year in which no such direction has been received.