Cash vs mercantile basis of accounting
This query is : Resolved
09 July 2015
Whether I can follow Cash basis for some sort of income and Mercantile basis for other kind of income in the same business.
If yes will the same be considered as Hybrid basis of Accounting?
If yes will the same be considered as Hybrid basis of Accounting?
CA R SEETHARAMAN
(Expert)
09 July 2015
Yes it will be considered as hybrid basis of accounting.
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09 July 2015
That means i can follow different methods for different income under the same business.
CA R SEETHARAMAN
(Expert)
09 July 2015
Yes you can follow there should be some reasoning for it.
09 July 2015
If your business's constitution is 'Company'. You have no option but to follow Mercantile basis of accounting since there are provisions in Companies Act 2013 that companies can follow only Mercantile Basis of accounting.
Also, Income Tax Act 1961 strictly says that either Cash Basis or Mercantile basis of accounting is allowed. Not hybrid.
Pls refer - finmin.nic.in/the_ministry/dept_revenue/ICDS_draft_CBDT.pdf
Also, Income Tax Act 1961 strictly says that either Cash Basis or Mercantile basis of accounting is allowed. Not hybrid.
Pls refer - finmin.nic.in/the_ministry/dept_revenue/ICDS_draft_CBDT.pdf
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CA R SEETHARAMAN
(Expert)
09 July 2015
I agree with the above view.
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