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CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · Tax Planning and Location of Business

Under the Income-tax Act, 2025, when is a claim for export incentives deemed to be income of a tax year?

Export incentives are deemed income of the tax year in which reasonable certainty of their realisation is achieved. The date of shipment, filing of the claim or actual receipt is not the test, which matters when planning the timing of incentive income.

  1. AThe tax year in which the export shipment is made
  2. BThe tax year in which the incentive is actually received in the bank
  3. CThe tax year in which reasonable certainty of its realisation is achievedCorrect
  4. DThe tax year in which the claim is first filed

Explanation

Section 278(2) provides that a claim for escalation of price in a contract or export incentives is deemed income of the tax year in which reasonable certainty of its realisation is achieved. Receipt, shipment or filing dates are not the test.

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