Rule 11UAB

Rule 11UAB – Fair Market Value Of Inventory

Rule 11UAB – Fair Market Value of Inventory

Clause (via) to Section 28 of the Income Tax Act, 1961, was inserted vide the Finance Act, 2018. The said clause provides that any profit and gains at the time of conversion of inventory into the capital assets should be charged to tax as business income under the head ‘profit or gains from business or profession’.

Vide notification no. 42/2018 dated 30th August 2018, rule 11UAB was inserted into Income Tax Rules. The said newly inserted rule 11UAB provides the manner of determination of fair market value of the inventory which has been converted into the capital assets or treatment as a capital asset.

Provisions of Rule 11UAB of the Income Tax Rules –

The Fair market value of the inventory as on the date of conversion or treatment as a capital asset, as per rule 11UAB, shall be determined as under –

  1. The fair market value of the immovable property (being land or building or both) shall be –

The value which has been adopted/assessed or assessable by any authority of State Government or Central Government for the purpose of payment of stamp duty in respect of such immovable property as on the date on which the inventory is converted/treated as a capital asset.

  1. The fair market value of Jewellery, drawings, archaeological collections, paintings, any work of art, sculptures, shares or securities referred in rule 11UA shall be –

The value arrived at as determined by following the manner provided at rule 11UA(1) of the Income Tax Rules.

  1. The fair market value of any other property not covered above shall be –

The value/price that the property would ordinarily get in the open market as on the date on which the inventory is converted/treated as a capital asset.

Effective Date From Which Rule 11UAB Would Be Applicable

The rule 11UAB shall come into force with effect from 1st April 2019. It must be noted that the same would apply in relation to the assessment year 2019-2020 and subsequent years.

Other Related Guides

Form 64D Form 64D - Income Tax State of Income Paid or credited by investment fund to be furnished under section 115UB of the Income Tax Act, 1961
Form 3AE Form 3AE - Income Tax Form 3AE is an audit report under section 35D(4) or 35E(6) of the Income Tax Act, 1961. Form 3AE must be provided by a practisi...
Interest on Securities Interest on Securities In income-tax parlance, security is a document possessed by the creditor as a guarantee for the payment indebted to him. Inter...
Form 16AA Form 16AA - Income Tax Certificate for tax deducted at source from income chargeable under the head “Salaries” – cum – Return of income...
Income Declaration Scheme Income Declaration Scheme The Income Declaration Scheme was announced in the Finance Bill 2016 by the Finance Minister as a limited period compliance...

Post by Shushma

IndiaFilings is India's largest online compliance services platform dedicated to helping people start and grow their business, at an affordable cost. We were started in 2014 with the mission of making it easier for Entrepreneurs to start their business. We have since helped start and operate tens of thousands of businesses by offering a range of business services. Our aim is to help the entrepreneur on the legal and regulatory requirements, and be a partner throughout the business lifecycle, offering support at every stage to ensure the business remains compliant and continually growing.


Hi there,

Online We are available online!