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Kalpesh ShahKalpesh Shah asked 1 month ago

Insertion of new section 145A. 43. After section 145 of the Income-tax Act, the following section shall be inserted with effect from the 1st day of April, 1999, namely :— ‘145A. Method of accounting in certain cases.—Notwithstanding anything to the contrary contained in section 145, the valuation of purchase and sale of goods and inventory for the purposes of determining the income chargeable under the head \”Profits and gains of business or profession\” shall be— (a) in accordance with the method of accounting regularly employed by the assessee; and (b) further 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 to the place of its location and condition as on the date of valuation. Explanation.—For the purposes of this section, any tax, duty, cess or fee (by whatever name called) under any law for the time being in force, shall include all such payment notwithstanding any right arising as a consequence to such payment’. What is the implication of this ?
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.

1 Answers
RaviRavi Staff answered 1 month ago

Sec 145A says to route taxes through P&L, that is INCLUSIVE method
As per AS / Ind AS we dont route it through P&L, that is EXCLUSIVE method
Profits as per both are same, so no impact on taxable income
people follow 2 approaches
1st they say yes there is difference in method in 145A and what we follow, they show reconciliation with NIL effect on profits.
2nd people simply says everything is fine as there is no impact on profits

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