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Accounting Policies changes

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05 March 2026 “If an assessee changes the method of inventory valuation (e.g., FIFO to Weighted Average), what are the implications on profit, financial statements, income-tax computation, and reporting in the Tax Audit Report under the Income-tax Act?”
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Aashok Kumar Sharma

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Aashok Kumar Sharma (Expert)
06 March 2026 A change from FIFO to Weighted Average will usually lower the closing stock value and net profit during periods of rising prices. For tax purposes, this is acceptable if it's a permanent and bonafide shift, but it must be transparently disclosed in the financial notes and specifically quantified in Clauses 13 and 14 of the Tax Audit Report (Form 3CD).
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