Voices on Reporting : August 2016

Voices on Reporting : August 2016

In this month’s call, we provided an overview of the proposals issued by the MAT – Ind AS Committee on 5 August 2016.

Related content

Framework proposed by MAT- Ind AS Committee

KPMG in India is pleased to present Voices on Reporting – a monthly series of knowledge sharing calls to discuss current and emerging issues relating to financial reporting.

In this month’s call, we provided an overview of the proposals issued by the MAT – Ind AS Committee on 5 August 2016.

Background

On 18 March 2016, the Minimum Alternate Tax (MAT) - Indian Accounting Standards (Ind AS) Committee (the Committee) had issued a report proposing a framework for computation of book profits for Ind AS compliant companies (the Framework) for the computation of book profit for the purpose of levy of MAT under Section 115JB of the Income Tax Act, 1961 (the IT Act).

In this report (issued on 18 March 2016) the Committee had made the following key recommendations:

  • No further adjustments should be made to the net profits of Ind AS compliant companies, other than those specified in Section 115JB of the IT Act,  
  • Certain items included in net other comprehensive income (OCI), that are permanently recorded in reserves and never reclassified into the statement of profit and loss, to be included in book profits for MAT at an appropriate point of time, and  
  • Certain adjustments recorded in retained earnings on first-time adoption of Ind AS, that would never subsequently be reclassified into the statement of profit and loss should be included in book profits (for the purpose of levy of MAT) in the year of first-time adoption of Ind AS.

New development

Based on several responses received from the stakeholders, the Committee through a press release dated 5 August 2016 issued further recommendations with respect to the following issues:

  • Property, plant and equipment - adjustments to retained earnings
  • Leases - straight lining of lease rentals
  • Investments - fair value adjustments through statement of profit and loss
  • Other adjustments relating to first-time adoption of Ind AS recorded in retained earnings.

Downloads:

Slide deck - August 2016(PDF, 565 KB)

 

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