Deat Sir,
A person have income from business books cover under audit 44AB. I'm Financial year 2020-21 gross profit increased more than 4% as compared to Financial year 2019-20. to decrease GP in books he had reduced 4% stock and file the ITR. The impact of 4% up coming in Financial year 2021-22 Now GP value is minor increase but % is too increase.
Please suggest in case.
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Gross Profit Increase but value decrease
Replies (1)
Summary: Artificially reducing stock to lower Gross Profit is an incorrect accounting practice that violates valuation standards and will likely be flagged by a tax auditor. You should value stock based on actual cost or market value and be prepared to provide a logical, fact-based explanation for any year-over-year fluctuations in GP to avoid tax complications.
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