Revenue Neutrality In Accounting

Referring to changes in the tax laws that result in no alteration in the amount of revenue coming into the government s coffers.

Revenue neutrality in accounting. To be reliable the information contained in financial statement must be neutral that is free from bias. Constraints on tax reform that it should not change revenues available to government in any significant way. 1 revenue neutrality means that any modification in a particular law or policy will not increase or decrease the revenue that can be generated by the government. In other words the changes made in the law will be revenue neutral if it will not affect the revenues that the government can earn.

Dear professional colleague sc upholds plea of revenue neutrality in case of captive consumption to set aside invocation of extended period. He should pay the service tax in time and if so the interest is liable to be paid by him. We are sharing with you an important judgment of the hon ble supreme court in the case of nirlon ltd. Students also viewed these business law questions.

To help you become familiar with the accounting standards this case is designed to take you to. What is meant by revenue neutrality. Thus revenue neutrality arises in cases of reverse charge mechanism export of services etc in which the service tax paid by them is eligible to take credit. For example a pro.

Vs commissioner of central excise bombay high court once the assessees derive no benefit by not reversing cenvat credit on the inputs when sister concerns are also eligible to take that credit then in the absence of any cogent and reliable evidence particularly on the diversion of inputs the principle or doctrine of revenue neutrality which was. What is meant by faithful representation is that the businesses and the transactions that are carried out by the stakeholders are needed to be presented in a faithful manner adhariani et al. The other accounting concept that has been used a lot in the accounting discussion and along with the neutrality is that of the faithful representation adhariani et al. For example if a new company sold 75 000 of goods in december but allows the customer to pay 30 days later the company s december sales are 75 000 even though no cash was received in december.

Sanvijay rolling engineering ltd. On following the concept of revenue neutrality the assessee cannot escape from paying service tax. Financial statements are not neutral if by the selection or presentation of information they influence the making of a decision or judgement in order to achieve a predetermined result or outcome. The best way to calculate a company s revenue during an accounting period year month etc is to sum up the amounts earned as opposed to the amounts of cash that were received.

As a result profit will be understated for the first three years whereas it will be overstated in the last two years of the asset s life. What is meant by revenue recognition.