Cash vs mercantile basis of accounting

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Ankit (Querist)
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09 July 2015 Whether I can follow Cash basis for some sort of income and Mercantile basis for other kind of income in the same business.

If yes will the same be considered as Hybrid basis of Accounting?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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09 July 2015 Yes it will be considered as hybrid basis of accounting.

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Ankit

Ankit (Querist)
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09 July 2015 That means i can follow different methods for different income under the same business.

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CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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09 July 2015 Yes you can follow there should be some reasoning for it.

CA John Abraham Austin ACA

CA John Abraham Austin ACA (Expert)
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09 July 2015 If your business's constitution is 'Company'. You have no option but to follow Mercantile basis of accounting since there are provisions in Companies Act 2013 that companies can follow only Mercantile Basis of accounting.

Also, Income Tax Act 1961 strictly says that either Cash Basis or Mercantile basis of accounting is allowed. Not hybrid.

Pls refer - finmin.nic.in/the_ministry/dept_revenue/ICDS_draft_CBDT.pdf

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CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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09 July 2015 I agree with the above view.

Ankit

Ankit (Querist)
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09 July 2015 OK. Thanks for the response.