My client is in business of export of garment. He is currently following mercantile system of accounting but now he wants to change the method of accounting from mercantile to cash. Its a partnership firm. Is it possible to adopt the cash basis as method of accounting in the export business. Is there any law which restrict the use of cash basis for export business for a pertnership firm. What will be the impact on Taxation under Income Tax Act.
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Method of Accounting
Replies (1)
Under Section 145 of IT Act, The Two Source of Income Among Five Can Follow Any Basis Among Cash or Merchantile.....
(1) Income From Business / profession
(2) Other Source
So, Here in UR Case, He Can Follow Any of Method & Change Also......
Just Have to show in Audit Report, of Change in Method of Accounting.........
& Also Show Effect on Profit & Loss Due To Changes.
There are No Such Restriction in IT act for Changing The Method of Accounting........
Regards,
Ayush Agrawal
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