Receipt is not the only timing test
For FY 2025–26 and AY 2026–27, section 145B(2) of the Income-tax Act, 1961 deems export incentives income of the previous year in which reasonable certainty of realisation is achieved. A filed application, an accounting accrual and a cash receipt are different evidence points. This article addresses the incentive-by-incentive government-claim register, rather than negotiating a price-escalation claim against a customer. It does not establish entitlement to any particular export scheme. The saved 1961 Act framework continues to apply to FY 2025–26 / AY 2026–27 even when filing occurs after 1 April 2026. A price-escalation claim is also covered by section 145B(2), but is outside this article’s export-incentive working.
Read the applicable text: Income-tax Department: Income-tax Act, 1961, section 145B(2).
Establish eligibility before timing
For each incentive, obtain the actual scheme or notification applicable to the export, period, goods or services, claimant and conditions. Identify evidence of eligible exports, supporting declarations, applications and any outstanding condition or objection. Section 145B(2) supplies a recognition-timing rule; it does not create a benefit or override a scheme exclusion. Do not turn an expected percentage of export turnover into income without verifying entitlement and amount.
Record what makes realisation reasonably certain
Use a chronology of application, acknowledgement, scrutiny queries, acceptance, sanction and subsequent developments. Explain which evidence supports the conclusion at the reporting cut-off and which uncertainty remains. Neither sanction nor cash receipt should be described as an invariable statutory trigger supplied by this subsection. Conversely, an internal budget or management expectation alone may not explain why the claim is realisable. Record a reasoned conclusion and its supporting documents rather than choosing a convenient date.
Break disputed claims into supported components
A single application can contain different invoices or claim heads. Determine whether evidence supports part of the claim while the remainder is contested. Retain separate quantities and amounts, and explain why the distinction is substantive. An unsupported aggregate haircut is not a substitute for eligibility and certainty analysis. Later correspondence should be examined for what it says about the actual relevant facts; do not mechanically shift every subsequent receipt back into the prior year.
Bridge book income to taxable income once
Compare the amount recognised in the books with the amount falling into the relevant tax year under the supported section 145B(2) analysis. Maintain opening amounts already taxed, current additions and receipts against those amounts. Collection of a claim previously included in taxable income must not silently be counted again as a new incentive. Scheme-specific chargeability, classification, any separate exemption and other tax provisions remain independent questions.
Close with a claim-specific evidence pack
The final working should connect the export population, operative scheme, claim amount, certainty conclusion, book entry, tax adjustment and bank or other settlement record. Escalate unresolved legal eligibility or measurement issues before filing. The examples assume independently verified taxable incentives and use fictional amounts; they prescribe no scheme rate, form, ITR row or universal filing deadline. A portal validation result cannot establish reasonable certainty or scheme eligibility.
Six worked illustrations
All facts and amounts are fictional. Calculations illustrate the stated assumptions, not a predetermined legal outcome.
Illustrative example 1: Books and tax agree
A company's independently eligible incentive of ₹4,00,000 is reasonably certain by 31 March 2026 and is fully recorded in FY 2025–26 books. The assumed taxable amount is ₹4,00,000 and the book-to-tax adjustment for this timing item is ₹0. Receipt in a later period is tracked against the already taxed claim.
Illustrative example 2: Supported part of a larger claim
The application totals ₹6,00,000, but evidence supports reasonable certainty for ₹4,50,000 while ₹1,50,000 remains substantively disputed. On that documented conclusion the timing working includes ₹4,50,000, not automatically all ₹6,00,000. If books accrued the whole claim, the difference is ₹1,50,000, subject to the full tax analysis.
Illustrative example 3: Tax recognition exceeds book recognition
Assume ₹3,00,000 meets the verified timing test in FY 2025–26, but only ₹2,20,000 is credited to the books. The current reconciliation adds ₹80,000 to the book income for this item. Record why the tax conclusion differs rather than posting an unexplained round-sum adjustment.
Illustrative example 4: Collection is not a second inclusion
An opening incentive receivable of ₹2,50,000 was already included in taxable income in an earlier year. ₹2,00,000 is collected during FY 2025–26, leaving ₹50,000 outstanding. On those assumptions the ₹2,00,000 collection is not new income merely because it appears in the bank statement.
Illustrative example 5: Several claim populations
Three separately supported current-year incentives are ₹1,20,000, ₹80,000 and ₹50,000. Their total is ₹2,50,000. A fourth ₹70,000 application still lacks the documented certainty conclusion. Keep the ₹3,20,000 application total separate from the ₹2,50,000 supported recognition population.
Illustrative example 6: Roll forward the receivable
Assume opening previously taxed claims ₹1,00,000, current recognised claims ₹3,00,000 and collections against those claims ₹2,40,000, with no other changes. Closing receivable is ₹1,60,000. If the ledger shows ₹1,90,000, investigate the ₹30,000 gap before assuming it is additional taxable income.
Ten-step verification table
| Step | Action | Evidence |
|---|---|---|
| 1 | Fix the period | FY 2025–26 and AY 2026–27 in the register. |
| 2 | Identify the scheme | Applicable primary notification and entitlement conditions. |
| 3 | Match exports | Eligible invoice, shipment or service records as required by the scheme. |
| 4 | Reconcile application values | Claim heads and amounts supported by evidence. |
| 5 | Track official correspondence | Acknowledgements, queries and substantive decisions. |
| 6 | Assess reasonable certainty | Dated conclusion for each supported claim or component. |
| 7 | Compare the books | Accrual entries and differences from the tax conclusion. |
| 8 | Track earlier inclusions | Opening receivables linked to prior tax computations. |
| 9 | Allocate collections | Bank or settlement evidence matched to individual claims. |
| 10 | Close the computation | Current inclusion, adjustments and closing-claim reconciliation. |
Sixteen practitioner FAQs
1. Does section 145B(2) require cash receipt first?
No. Its stated test is reasonable certainty of realisation.
2. Does filing an application itself establish certainty?
Not necessarily. Examine eligibility, outstanding conditions and the evidence.
3. Does this section create export-scheme entitlement?
No. Establish that separately under the applicable scheme.
4. Is sanction always the only possible trigger?
The subsection does not prescribe sanction as an invariable trigger. Document the actual facts.
5. Can an internal budget prove the claim?
A budget alone does not establish legal eligibility and realisation evidence.
6. Can part of an application be analysed separately?
Yes, where the facts support a genuine component-level distinction.
7. Is an arbitrary percentage haircut an adequate working?
No. Explain the amount supported and the uncertainty affecting the rest.
8. Does book recognition bind the tax timing conclusion?
Not automatically. Prepare the statutory reconciliation.
9. Can tax recognition exceed the book credit?
It can on the assumed facts; the difference needs a supported computation adjustment.
10. Does collection of an already taxed receivable create the same income again?
Do not count the same incentive twice merely because it is collected later.
11. Should old claims be retained in the register?
Yes. Opening tax history is needed to allocate receipts and avoid duplication.
12. Can a current receipt automatically be attributed to the oldest claim?
Match actual settlement references and the relevant records.
13. Does every government receipt fall within this exact provision?
No. Classify the receipt and applicable tax rule before using this working.
14. Do these examples establish a particular incentive rate?
No. They assume entitlement and amounts have been independently verified.
15. Does the article use the 2025 Act’s later tax-year numbering?
No. It addresses FY 2025–26 under the 1961 Act’s section 145B(2).
16. What must the reviewer reproduce?
The eligible population, certainty date, current inclusion, prior taxed amounts and collections.
Official sources
Income-tax Department: Income-tax Act, 1961, section 145B(2)
Income-tax Department: transition guidance for FY 2025–26 / AY 2026–27