Voices on Reporting : February 2017

Voices on Reporting-Finance Bill 2017

Special session on Finance Bill, 2017 – Financial reporting perspective


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Special session on Finance Bill, 2017 – Financial reporting perspective


Indian Accounting Standards (Ind AS) are converged with International Financial Reporting Standards and are applicable to Phase I companies from 1 April 2016 as per the road map laid down by the Ministry of Corporate Affairs. India now has two financial reporting frameworks that will co-exist
and be applicable to a mutually exclusive set of companies, with Ind AS being applicable to larger companies and the older Accounting Standards being generally applicable to smaller companies.

The existence of two financial reporting frameworks has also necessitated a response from the tax authorities to ensure that there is horizontal equity from a taxation point of view, for companies, irrespective of the financial reporting framework that they follow. Therefore, following steps have been taken:

  • The Central Board of Direct Taxes (CBDT) has issued Income Computation and Disclosure Standards (ICDS) applicable from 1 April 2016. However, ICDS do not cover the issues relating to computation of Minimum Alternate Tax (MAT), which is based on book profits, for companies transitioning to Ind AS.        
  • In 2015, CBDT formed the MAT – Ind AS Committee (the Committee) for proposing a framework for computation of book profits for Ind AS compliant companies for computation of MAT under Section 115JB of the Income Tax Act, 1961 (IT Act).
  • The CBDT released two interim reports of the Committee on 18 March 2016 and 5 August 2016. A final report was submitted by the Committee on 22 December 2016.

New development

On 1 February 2017, the Finance Minister presented the Finance Bill, 2017 (the Bill) which contains a number of proposals including proposals relating to the computation of book profit for the purpose of levy of MAT under Section 115JB of the IT Act.

On the call held on 8 February 2017, we provided an overview and implications of the proposals given in the Bill on the following topics:

  • Computation of book profit for Ind AS compliant companies for the purpose of levy of MAT
  • Income Computation and Disclosure Standards  
  • Change in base of cost inflation index from 1 April 1981 to 1 April 2001
  • MAT credit allowed to be carried forward to 15 Assessment Years.



Slide deck - February 2017 (PDF, 505 KB)

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