Section 43CB - Computation of income from construction and service contracts - Income Tax - Ready Reckoner - Income Tax

Section 43CB - Computation of income from construction and service contracts Section 43CB has been inserted by the Finance Act, 2018, with effect from the assessment year 2017-18. 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 ICDS notified under section 145(2) . Exception: The profits and gains arising from a contract for providing services with duration of not more than ninety days shall be determined on the basis of project completion method. The profits and gains arising from a contract for providing services involving indeterminate number of acts over a specific period of time shall be determined on the basis of straight line method. NOTE: For the purposes of percentage of completion method, project completion method or straight line method, the contract revenue shall include retention money. The contract costs shall not be reduced by any incidental income in the nature of interest, dividends or capital gains.