Hi,
Yes, you can use FIFO method.
We are doing investment in shares in our company. We are also doing bonus stripping to save tax. In bonus shares when we used to sell initial shares we would get short term loss as per FIFO and then the bonus shares we would hold for one year and sell after year and long term tax was free and would pay MAT on the gains. Now our CA of one company is saying that FIFO we cannot follow as per company law and we have to follow average cost principle. Due to which tax burden will increase a lot. Other company CA has not raised any such objection and continuing to follow the earller method and so we are a bit confused. Please clarify
Dear Sir,
Hope you are doing well !
Your valuation method is correct and needs no rectification.
You can go ahead with FIFO approach.
Thanks & Regards,
Payal Chhajed
Hi,
For income tax purposes, FIFO method is allowed.
You don't need to follow companies act requirement for income tax purposes. Companies act requirements are for financial accounting and not for tax purposes.
Hi
FIFO is acceptable according to income tax act. You can use FIFO for tax purposes.
However, for books of accounts, company law needs to be referred to.
As per income tax there is no issue with FIFO.
If there is any timing difference because of this as income tax allows FIFO and companies act doens't allow this you would need to pay MAT.
hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.
Thank you