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Shifting from mercantile to cash basis of accounting

Srishti Shetty (Final CA student) (89 Points)

14 July 2016

Is it possible to change your accounting to cash basis and revert to mercantile basis in later years?What are the situations where an assessee can change his basis of accounting?

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CA Mehul Chudasama (Chartered Accountant) (618 Points)
Replied 15 July 2016

An assessee is free to adopt an accounting method -mercantile or cash – or even a method of accounting which is regularly employed by it . The basic thing is that the accounting system adopted should be fair and should be followed regularly. This is what section 145 of the I T Act provides

So If you consitently followed Mercantile System for income tax you have to follow that only

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