Icds 2

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AMISHA KOTHIWAL (Querist)
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22 June 2016 As per ICDS 2 - defination of cost of inventories "Cost of Inventories shall comprise of all costs of purchase, costs of services, costs of
conversion and other costs incurred in bringing the inventories to their present location and
condition."
And Further the costs of purchase shall consist of purchase price including duties and taxes, freight
inwards and other expenditure directly attributable to the acquisition. Trade discounts,
rebates and other similar items shall be deducted in determining the costs of purchase.
Hence, As per ICDS 2 Sale Tax shall be included in value of Closing Inventory but how can we include sale tax amount which we have already taken as VAT Input and utilised against Output Tax?

CA. Hari Kishan

CA. Hari Kishan (Expert)
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22 June 2016 Ms.Amisha

Your understanding is right on cost of inventory. However you may kindly note that tax which is "COST" shall form part of the inventory valuation. Since you rightly mentioned that VAT tax paid is claimed as input - the same shall be excluded. Trust the same clarifies. Welcome if you have a different view.

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