Section 22 : Method of tax accounting

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1) The matter when any person gets any income or makes any expense shall be determined in accordance with the widely recognised accounting principle, subject to this Act.

2) A natural person shall, while computing the income to be earned from his employment and investment, maintain accounts on the cash basis, for purposes of tax.

3) A company shall maintain accounts on an accrual basis for purposes of tax.

4) Except if the Department has otherwise specified by issuing a notice in writing, any person may, for purposes of income tax, maintain accounts on the cash or accrual basis, subject to sub-sections (1), (2) and (3).

5) Any person may make an application to change the method of accounting for tax purposes, subject to sub-sections (2) and (3). If the Department thinks that it is necessary to change the method of accounting to clearly show the income of such person, the Department may give permission to change the method of accounting.

6) If the method of accounting of any person for purposes of tax is changed pursuant to sub-section (5) in computing the income of that person in the income year when such change is made, the adjustment has to be so made that no amounts out of those included, deducted or to be included or deducted are omitted or duplicated.

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Section 22 : Method of tax accounting

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