Inventory valuation rules govern business income, including tax-inclusive cost, securities valuation, and bank-specific standards.

Method of accounting for business income requires inventory to be valued at the lower of actual cost or net realisable value, with taxes, duties, cess or fees included in valuation where actually paid or incurred. Securities are valued differently depending on whether they are unlisted, listed, or held by a scheduled bank or public financial institution, with category-wise comparison of cost and net realisable value and application of the relevant income computation and disclosure standards. The commentary also refers to GST treatment and certain valuation consequences on conversion, contribution, partition, and inheritance-related stock-in-trade cases.

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