Rule 172: Special-audit and inventory-valuation expense procedure
Rule 172 sets the expense-determination procedure for the specified accounts audit or inventory valuation. It provides for professional panels, an inclusive hourly range, the hours specified for the report and review of the supporting time sheet.
Official notified Income-tax Rules, 2026Need advice on Rule 172?
This article is for general information. Read the official Rules and applicable Act amendments, including the Taxation and Other Laws (Amendment) Act, 2026. If you need professional advice for your situation, contact Bizeneed.
On this page
Bare law
Rule 172 - Procedure for purposes of determining expenses for audit or inventory valuation
(1) Every Chief Commissioner of Income-tax shall, for the purposes of 268(5)(i) and (ii), shall maintain a panel of— (a) accountants, out of the persons referred to in section 515(3)(b); and (b) cost accountants, out of the persons referred to in section 268(13).
(2) Where the Assessing Officer directs— (a) for audit under section 268(5)(i); or (b) for inventory valuation under section 268(5)(ii), the expenses of, and incidental to, audit or inventory valuation (including the remuneration of the accountant or cost accountant, qualified assistants, semi-qualified and other assistants, who may be engaged by such accountant or cost accountant), shall not be less than ₹ 3750 and not more than ₹ 7500 (both inclusive) for every hour of the period as specified by the Assessing Officer under section 268(8) or (9) or (10), as the case may be.
(3) The period referred to in sub-rule (2) shall be specified in terms of the number of hours required for completing the report.
(4) The accountant or cost accountant referred to in section 268(5)(i) or (ii), shall maintain a time-sheet and submit it to the Chief Commissioner of Income-tax or Commissioner of Income-tax, along with the bill.
(5) The Chief Commissioner of Income-tax or the Commissioner of Income-tax shall ensure that the number of hours claimed for billing purposes is commensurate with the size and quality of the report submitted by the accountant or cost accountant.
Rule breakdown
Panels contain the defined professionals
The Chief Commissioner maintains panels of accountants and cost accountants from the categories identified in the cited Act definitions.
The professional category depends on the relevant audit or inventory-valuation role; a generic consultant label does not establish eligibility.
The expense range is tied to the statutory report work
For the specified direction, the expenses of and incidental to the audit or valuation, including the described professional and assistant remuneration, are between ₹3,750 and ₹7,500 per hour, inclusive, for the specified period.
This is the rule’s statutory expense framework, not a general market price for all private tax engagements or an unrestricted separate hourly allowance for every person mentioned.
The specified period is expressed as report hours
The Assessing Officer specifies the relevant period in terms of hours required to complete the report under the cited Act provisions.
Maintain a work plan and record actual work against the relevant report scope. Do not substitute an unrelated calendar-duration calculation for the prescribed hours.
Submit a time sheet with the bill
The accountant or cost accountant maintains a time sheet and submits it with the bill to the Chief Commissioner or Commissioner.
The authority must ensure the hours claimed are commensurate with the report’s size and quality. A bill’s arithmetic alone does not complete that review.
Keep expense responsibility and approval separate
Read the current parent Act for who bears the expenses and the wider direction process. This rule sets the manner of determining expenses.
Retain the direction, specified hours, time sheet, report and bill so the claim can be reviewed against the actual work.
Key takeaways
Defined professional panels
The Act definitions govern the relevant categories.
Inclusive hourly range
₹3,750 to ₹7,500 for the specified expense framework.
Time sheet required
Submit it with the bill.
Quality and size review
Claimed hours must be commensurate with the report.
Practical checklist
- Use the correct professional category.
- Record report hours and work performed.
- Submit the time sheet with the bill.
- Retain the direction and report for review.
Avoid
- Do not present the statutory range as a general market fee.
- Do not treat a bill alone as a substitute for the time sheet.
FAQs
Is ₹7,500 a universal private tax-advice rate?
No. The range applies to the audit or inventory-valuation expense framework specified in this rule.
Is a time sheet required?
Yes. It is maintained and submitted with the bill to the stated authority.
Are the hours accepted without review?
The authority must ensure they are commensurate with the report’s size and quality.
Does this rule alone determine every question of who pays?
Read the current parent Act for expense responsibility; this rule addresses determination procedure.
Glossary
- Specified hours
- The hours required to complete the report, specified under the cited statutory process.