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Method of accounting for income from other sources

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SUSHANT BIDAYE

721 Points Posted on 20 May 2021

I have interest from securities and other interest etc. that falls under the head income from other sources.

would like to know if I have a choice to account it on cash basis. please also mention the relevant tax clause.

Replies (6)

Quick Summary

This discussion clarifies how to account for income from other sources, such as interest from securities. It confirms that you have the option to use either the cash basis or the mercantile system of accounting, as per Section 145(1) of the Income Tax Act. This choice is available for income computed under the heads 'Profits and gains of business or profession' or 'Income from other sources'.

CA. Sourav Sarkar

Chartered Accountant

24588 Points Posted on 20 May 2021

Yes you can account it on cash basis also

Sivaramaraju G

Learner

2398 Points Posted on 21 May 2021

Income to be computed either on the basis of cash or mercantile system of accounting [Section 145(1)]

Income chargeable under the head "Profits and gains of business or profession" or "Income from other sources" shall, subject to the provisions of section 145(2)(ICDS), be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee.