Stock Working

Dealers who do not maintain physical stock inventory (quantitative base) are found facing practical difficulty in deriving stock on a particular date especially when search  or inspection takes place. Difficulty is noticed when variation in physical stock with stock mentioned on books of accounts does not tally. There may be some specific reason to it, i.e. if the stock is laying dead, outdated, odd lot, etc. the price of such stock has to be carefully mentioned. The valuation of stock also has to be kept in mind whether it is on cost price or purchase price. General observation is a variation in stock is due to lack of knowledge of computation method. A pattern adopted by the department is that, any variation in the stock has been enhanced by 100% and tax is assessed. The revenue does not stop at this stage and exercise the powers of levy of penalty and imposes it @ 150%. If the authority exercises the powers of provisional assessment which do not permit the levy of penalty besides the fact the amount of penalty has been forced to be deposited.

In order to help our clients and to make the task easy, we have attached a sheet which specifically contains information of dealers’ category either Trading or Manufacturing that will help in this process of keeping the physical stocks and books tallied. It is a very small exercise which once followed might help our clients from long term hassle and problems. We appeal all our clients to follow the procedure and do this exercise periodically.