Method of accounting under section 145A of the Income Tax Act

Method of accounting under section 145A of the Income Tax Act

Section 145A of the Income Tax Act prescribes that for the purpose of calculation of income chargeable under the head "Profits and gains of business or profession the valuation of purchase and sale of goods or services and of inventory shall be adjusted to include the amount of any tax, duty, cess or fee (by whatever name called) actually paid or incurred by the assessee to bring the goods or services to the place of its location and condition as on the date of valuation.
From the above I understand that in Profit and Loss Account ; Opening Stock , Purchases, Sales , Closing Stock shall be Gross (i.e. including GST). All GST would be routed through Profit and Loss account only.
My question is as follows :

1) Is my understanding correct ?
2) For the purpose of calculating ratios in point no 40 of Form 3CD , Net Turnover would be use or Gross Turnover would be used.

Asked 5 years ago in Income Tax

1) Show cost of consumption, sales and closing stock net of input if you have availed ITC. Do the adjustments in the Net profit or loss only in respect to the ITC.

2) Net Turnover.

Vivek Kumar Arora

CA, Delhi

5006 Answers

1133 Consultations

Talk to Vivek Kumar Arora

No. These would exclude GST.

Use turnover without GST.

The outstanding GST i.e. GST payable for the month of March shall be reported under 43B.

Lakshita Bhandari

CA, Mumbai

5687 Answers

942 Consultations

Talk to Lakshita Bhandari

Dear Sir,

Hope you are doing well !!

1.No, it is excluding GST.

2. Net turnover.

Payal Chhajed

CA, Mumbai

5189 Answers

302 Consultations

Talk to Payal Chhajed

Hello,

1. No, if you followed this method you will violate accounting standards, which will lead to a disqualification in the audit report. You will have to follow the exclusive method and not include GST.

2. Net Turnover.

I hope that this answer satisfies your requirements.

Regards,

CA Hunny Badlani