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Notional gain accounting treatment

21 May 2023

does notional gain/income is recorded in books of account
like if a doctor received free service/consultation from a professional then does it is recorded as income in books of accounts of doctor

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6 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160332 Points)
Replied 22 May 2023

Yes, provided the value of aggregate services exceed Rs. 50,000/- in any year.

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Atharv Sankliya (1306 Points)
Replied 22 May 2023

Also for the purpose of accounting?

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160332 Points)
Replied 22 May 2023

Yes, without accounting how the tax liability be ascertained.

Atharv Sankliya (1306 Points)
Replied 22 May 2023

Sir can you please explain why free service received is recorded in books of account of receiver as income/gain/benefits as no monetary benefits is derived by the firm
please clarify

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160332 Points)
Replied 22 May 2023

Notional gain itself means gain which is not monetary in nature,

As per sec. 56(2)(X) of IT act, any gain be monetary or notional is taxable.

Accounting in books means it is recorded based on its fair value.

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Yasaswi Gomes new (Finance ) (4474 Points)
Replied 24 May 2023

Now since you know its a notional gain its probable that economic benefit inflow is certain. It must be recognised. If not make a disclosure. Its rarely that I see an example valid in accounting where benefits substituted for income.