Income Computation & Disclosure Standards (ICDS)
Issued by CBDT under power under section 145(2) of Income Tax Act, 1961 vide notification no. 32/2015, dated 31-3-2015
Purpose: Computation of Income under PGBP head and Income from Other sources head
Applicability: All assessee following mercantile accouting system
W.e.f. 01/04/2015 i.e. Assessment year 2016-17
ICDS - VIII - Securities
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S.No.
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Scope of ICDS
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Particulars
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VIII
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Securities
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1. Scope - Treatment of Securities held as Stock in trade.
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2. Out of scope - Reconginition of interest & dividend on securties (covered by ICDS -IV) , Securities held by Insurance companies , Securities held by mutual fund, venture capital funds , banks & public financial institutions.
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3. Terms used - Fair value: Price of Arm length transaction of willing buyer or seller , Securities : Except derivatives , same as meaning assigned in sec.2 of SCRA, 1956.
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4. Recognition and Initial Measurement of securities - At Actual Cost.
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5. Actual Cost - Purchase price and all acquisition costs i.e.brokerage, fees, tax, duty or any cess.
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6. In case securities acquired in exchange of securities or other assets - Fair value of such securities received will be termed as actual cost.
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7. In case of Interest bearing securities purchased which includes accrued interest - On receipt of interest after acquisition, Pre acquisition portion of interest will be deducted from the actual cost.
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8. Subsequent measurement of Securities - At the year end , securities will be value at actual cost or NRV, which ever is less. - Listed Securities
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9. Comparison between actual cost or NRV will be based on categories of securities. 4 categories named Shares, Debt securities , Convertible securities and any othe securities not covered in earlier categories.
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10. Cost calculation will be done using FIFO method.
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11. Unlisted Securities or listed but quotes are not regularily available , will be valud at actual cost only.
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12. In subsequent year, opening balance - Closing balance as at last day of the previous year. In case new business started in previous year - Balance as at the start day of the business.
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