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FAQ on ICDS

Income Tax - Started By: - Deepak Aggarwal - Dated:- 6-6-2015 Last Replied Date:- 18-6-2015 - A 1. What is ICDS? The Ministry of Finance has issued ten Income Computation and Disclosure Standards (ICDS), which is a new framework for computation of taxable income. Notification No. 32/2015 [F. No. 134/48/2010- TPL]/SO 892(E) on 31st March 2015. This notification is applicable from Assessment year 2016-17 for both Corporate and Non-Corporate Assessees. Ten ICDS have been notified till date. 2. What .....

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ate set of ICDS. Applicability 3. Who does it apply to? It applies to all assesses in relation to their income under the heads Profit and gains of business or profession and Income from Other Sources .(All assesses following the mercantile system of accounting ) 4. Does this apply to non residents? Yes, ICDS applies to non residents and residents also in so far as they have income under the heads Profit and gains of business or profession and Income from Other Sources . 5. When is it applicable .....

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from other sources shall, subject to the provisions of sub-section (2), be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. (2) The Central Government may notify in the Official Gazette from time to time [accounting standards] to be followed by any class of assessees or in respect of any class of income. (3) Where the Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee, or where th .....

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5 confers the power for notifying Accounting Standards and not Income computation standards. There seems to be a dichotomy here. Advance tax, Tax Audit and MAT- PY - 2015-16 9. Would this impact Income Tax computation for advance tax for Q1 2015-16? Yes, these Standards being applicable for FY 2015-16 would have to be considered in computing the advance tax for quarter ended Jun 30, 2015. 10. How does ICDS impact MAT? Minimum alternate tax (MAT) for corporate taxpayers is based on book profit de .....

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AS would result in conflicts for entities which are required to adopt IND AS. • The Standards all seem to suggest advancement or pull ahead of revenue as compared to certain established judgments and may have a cash flow impact • The computation of net income as per the financial statements and taxable income as computed under ICDS may differ even substantially in certain cases. • The impact of judicial pronouncements not in line with the proposed ICDS treatment could be an issue .....

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s not comply with ICDS? Sec 145 (3 ) speaks of the consequences of non compliance with ICDS requirement as under : Where the Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee, or where the method of accounting provided in sub-section (1) or accounting standards as notified under sub-section (2), have not been regularly followed by the assessee], the Assessing Officer may make an assessment in the manner provided in section 144( bestjudgement .....

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nsure compliance with ICDS and the cost of compliance would be enhanced. The challenge for these enterprises would be dual - embracing AS and ICDS 17. How will this impact very large entities? With Ind - AS notified for implementation from 2016-17 , there could be significant differences between principles adopted in ICDS Vs Ind-AS and hence taxable income as per ICDS and net income as per the financial statements could be subject to significant differences 18. What would be the top concerns in .....

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