On 31 March 2015, the Ministry of Finance (MOF) issued 10 Income Computation and Disclosure Standards (ICDS), operationalising a new framework for the computation of taxable income. All assesses are required to adopt these standards for the purposes of computation of taxable income under the heads ‘Profits and gains of business or profession’ or ‘Income from Other Sources’. The Central Board of Direct Taxes (CBDT) notified these standards under Section 145(2) of the Income-tax Act, 1961 (the Act) vide ‘Notification No. 33/2015 dated 31 March 2015. The following is the list of the ICDS notified by the CBDT:
These standards are applicable for the previous year commencing from 1 April 2015, i.e. Assessment Year 2016-17 onwards.
Post the notification of the ICDS, it has been brought to the notice of the CBDT by many stakeholders that further clarifications and guidance is required on certain provisions for its proper implementation. Therefore, the CBDT has raised these issues to an expert group committee comprising departmental officers and professionals. The committee is currently examining these issues.
In order to issue a thorough guidance/clarification on the implementation issues, the CBDT has requested the stakeholders as well as the general public to share the issues and challenges they face while implementing the ICDS. The period for inviting these suggestions/comments ends on 15 December 2015.
This is a welcome step by the CBDT as the adoption of ICDS has raised many implementation challenges for companies.
The adoption of ICDS brings with it a significant change and is expected to alter the way companies compute their taxable income, as many of the concepts from the existing Indian GAAP/Ind AS have been modified.
All stakeholders should consider providing their inputs to the CBDT, so that the required changes and clarifications are incorporated in an efficient and timely manner.
To access the text of the CBDT Press Release, please click here.
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