The ministry of corporate affairs (MCA) is looking to discuss the taxation matter relating to movement from Indian GAAP to International Financial Reporting Standards (IFRS) for reporting financial statements.
The ministry said if the shift from one standard to another leads to additional taxation, then in the first year that tax should have a neutral impact.
We are discussing these matters internally, after studying it we will discuss it with the finance ministry as we can provide one year of tax neutrality for the conversion, R Bandyopadhyaya, secretary, corporate affair ministry told DNA Money.
The ministry has constituted a core committee to look into matters of taxation relating to the IFRS convergence. The Institute of Chartered Accountants of India (ICAI) is currently studying the convergence tax issues in three sectors, telecom, banking and power and would come out with a detailed report in the first week of June.
ICAI would finalise the five accounting standards including Accounting Standard (AS) 1-presentation of financial statements, AS 2-inventories, AS 3-statement of cash flows, AS12-accounting for government grants and disclosure of government assistance and AS 16-borrowing cost.
In order to ensure that the convergence process is smooth and meets the stipulated deadlines, ICAI will be launching from the next month intensive training workshops in 58 locations across country. Meanwhile, ICAI president, Amarjit Chopra said they are also suo motu investigating the financial statements of the eight franchisee teams of IPL. We have started the process and are in talks with the ministry of corporate affairs to look into the matter.
Till now, we have got the names of companies and are in the process of getting their financial statements and even are looking at their auditors. By looks of it, something does not feel right, but we can not comment anything now, Chopra said.