Income-tax Act, 2025 · Part D — Profits and gains of business or profession

Section 57Revenue recognition for construction and service contracts

Income-tax Act, 2025 (30 of 2025)

(1)

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, subject to provisions of sub-section (2), as per the income computation and disclosure standards notified under section 276(2).

(2)

For the purposes of sub-section (1), the profits and gains arising from a contract for providing services shall be determined—

(a)on the basis of project completion method, if the duration of such contract is not more than ninety days;

(b)on the basis of straight line method, if the contract involves indeterminate number of acts over a specified period of time.

(3)

For the purposes of percentage of completion method, project completion method or straight line method under this section,—

(a)the contract revenue shall include retention money;

(b)the contract costs shall not be reduced by any incidental income in the nature of interest, dividends or capital gains.

This section refers to

§ 276 Method of accounting

Referenced by

§ 207(5)

§ 208 Tax on income from units purchased in foreign currency or capital gains arising from their transfer.

§ 209 Tax on income from bonds or Global Depository Receipts purchased in foreign currency or capital gains arising from their transfer.

§ 210 Tax on income of Foreign Institutional Investors from securities or capital gains arising from their transfer.

§ 27 Manner of computing profits and gains of business or profession