Section 24 : Accrual basis accounting

1) Any person shall, in maintaining accounts on the accrual basis of his income earned from business or investment subject to this Act, for purposes of tax, any income shall be included in the computation of his income, considering that any payment has been received immediately when the right to receive such payment is created.

2) For purposes of making a deduction in computing  income earned by any person as mentioned in sub-section (1), the following expenses shall be deemed to have been borne:-

a) If any payment involving such expenses has been made in lieu of a payment made by any other person, the expenses shall be deemed to have been borne in the following conditions:-

(1) The person has the liability to make that payment,

(2) The value of such liability can be ascertained in a realistic manner, and

(3) Payment has been received from another person.

b) In all other circumstances except those mentioned in clause (a), an expense shall be deemed to have been borne at the time when payment is made.

3) Notwithstanding anything contained in sub-section (1), the Department may recognise the accounting specified by the Nepal Rastra Bank with respect to the banking business, subject to the Nepal Rastra Bank Act, 2058 and prevailing laws relating to banking.

Provided that a cooperative organisation may keep an accounting of interest income on a cash basis.

4) Where, in computing on the accrual basis, the income earned by any person from a business or investment, any payment receivable by that person is included, or any payment to be borne by that person is deducted, and a difference occurs in the amount received or paid by that person because of, inter alia, the difference in the exchange rate, the difference has to be adjusted in receiving or making payment.