Section 43CB of Income Tax Act : Computation of income from construction and service contracts.

By | April 1, 2018
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(Last Updated On: June 6, 2018)

 Section 43CB of Income Tax Act

 Summary of Section 43CB of Income tax Act

 Section 43CB of Income tax Act  Inserted by the Finance Act, 2018, w.r.e.f. 1-4-2017.

 Section 43CB of Income tax Act

1 [Computation of income from construction and service contracts.

43CB. (1) The profits and gains arising from a construction contract or a contract for providing services shall be determined on the basis of percentage of completion method in accordance with the income computation and disclosure standards notified under sub-section (2) of section 145  :

Provided that profits and gains arising from a contract for providing services,—

(i)with duration of not more than ninety days shall be determined on the basis of project completion method;
(ii)involving indeterminate number of acts over a specific period of time shall be determined on the basis of straight line method.

(2) For the purposes of percentage of completion method, project completion method or straight line method referred to in sub-section (1)—

(i)the contract revenue shall include retention money;
(ii)the contract costs shall not be reduced by any incidental income in the nature of interest, dividends or capital gains. ]

Note on Section 43CB of Income Tax Act

1. Inserted by the Finance Act, 2018, w.r.e.f. 1-4-2017.

Section 43CB of Income Tax Act

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