Skip to content

CMA Intermediate · Direct and Indirect Taxation · Basic Concepts, Basis of Charge and Capital and Revenue Receipts

Under section 57 of the Income-tax Act, 2025, how is profit determined on a contract for providing services whose duration is 60 days?

The project completion method applies. Under section 57(2)(a), profits and gains from a contract for providing services are determined on the project completion basis when the contract duration is not more than ninety days, and 60 days qualifies.

  1. APercentage of completion method
  2. BStraight line method
  3. CProject completion methodCorrect
  4. DCash receipts basis

Explanation

Section 57(2)(a) requires the project completion method for a service contract of not more than ninety days. A 60-day contract falls within this. The straight line method in clause (b) is for contracts involving an indeterminate number of acts over a specified period.

Did you get it right without looking?

One question tells you little. A timed set on Basic Concepts, Basis of Charge and Capital and Revenue Receipts shows your real accuracy, how long you take and where you lose marks.

Practise Basic Concepts, Basis of Charge and Capital and Revenue ReceiptsFree diagnostic mock

More Basic Concepts, Basis of Charge and Capital and Revenue Receipts questions