diff --git a/erpnext/controllers/selling_controller.py b/erpnext/controllers/selling_controller.py
index d1d1d9469e..e200bf7923 100644
--- a/erpnext/controllers/selling_controller.py
+++ b/erpnext/controllers/selling_controller.py
@@ -164,14 +164,15 @@ class SellingController(StockController):
 
 	def validate_selling_price(self):
 		selling_settings = frappe.get_single("Selling Settings")
-		if not selling_settings.validate_selling_price_purchase_rate:
+		if not selling_settings.validate_selling_price:
 			return
 
 		for it in self.get("items"):
 			item = frappe.get_doc("Item", it.name)
 
-			if flt(it.base_rate) < flt(item.last_purchase_rate):
-				frappe.throw(_("Selling price for item {0} is lower than its Purchase rate. Selling price should be atleast {1}").format(it.item_name, item.last_purchase_rate))
+			if flt(it.base_rate) < flt(item.last_purchase_rate) or flt(it.base_rate) < flt(item.valuation_rate):
+				frappe.throw(_("""Selling price for item {0} is lower than its Purchase rate or Valuation rate.
+				Selling price should be atleast {1}""").format(it.item_name, item.last_purchase_rate))
 
 	def get_item_list(self):
 		il = []
diff --git a/erpnext/selling/doctype/selling_settings/selling_settings.json b/erpnext/selling/doctype/selling_settings/selling_settings.json
index 6d84730ce1..dd9bcd70c4 100644
--- a/erpnext/selling/doctype/selling_settings/selling_settings.json
+++ b/erpnext/selling/doctype/selling_settings/selling_settings.json
@@ -328,14 +328,14 @@
    "bold": 0, 
    "collapsible": 0, 
    "columns": 0, 
-   "fieldname": "validate_selling_price_purchase_rate", 
+   "fieldname": "validate_selling_price", 
    "fieldtype": "Check", 
    "hidden": 0, 
    "ignore_user_permissions": 0, 
    "ignore_xss_filter": 0, 
    "in_filter": 0, 
    "in_list_view": 0, 
-   "label": "Validate Selling Price for Item against Purchase Rate", 
+   "label": "Validate Selling Price for Item against Purchase Rate or Valuation Rate", 
    "length": 0, 
    "no_copy": 0, 
    "permlevel": 0, 
@@ -361,7 +361,7 @@
  "issingle": 1, 
  "istable": 0, 
  "max_attachments": 0, 
- "modified": "2016-10-19 18:32:19.667032", 
+ "modified": "2016-10-20 08:17:45.621151", 
  "modified_by": "Administrator", 
  "module": "Selling", 
  "name": "Selling Settings",