Latest Expert Exchange Queries

Make your inventory and invoicing software GST Ready from Binarysoft info@binarysoft.com
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: ACCOUNTING STANDARDS :: VAT Audit :: TDS :: empanelment :: due date for vat payment :: ARTICLES ON INPUT TAX CREDIT IN VAT :: ACCOUNTING STANDARD :: articles on VAT and GST in India :: VAT RATES :: TAX RATES - GOODS TAXABLE @ 4% :: cpt :: Central Excise rule to resale the machines to a new company :: list of goods taxed at 4% :: form 3cd :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes
 
 
News Headlines »
 Filing tax returns? Here are seven things to remember
 Clarifications on computation of book profit for the purposes of levy of Minimum Alternate Tax (MAT) under section 115JB of the Income-tax Act, 1961 for Indian Accounting Standards (Ind AS) compliant companies.
 Mistakes in filing income tax returns that may get you a tax notice
 Know how you can claim return of income in Form 26 AS case
 What you must know for tax filing this year
 How to file tax return if you have two Form 16s
 10 things you should know about Form 26 AS
 How to file income tax return without Form 16
 How to rectify income tax returns
 Income-tax (21st Amendment) Rules, 2017
 Deadline for filing income tax return nears; here are 10 common mistakes that you must avoid

India Inc faces taxing issues over IFRS
July, 01st 2010

As corporate India comes to terms with the complex new system of accounting standards, which it will have to adopt beginning April 1, it is vexed with two related issues that it has no control over taxation and the companies law.

As it is, the kaleidoscope of conflicting perspectives is complex enough to confound even the knowledgeable. For example, when you depreciate different components of an asset over varying useful lives and at different rates as mandated by the International Financial Reporting Standards (IFRS), as opposed to applying a single rate for the entire asset as is done today, will the depreciation load rise or decline? You have freehold land and haven't decided if it is for real estate development or your own office building is the land, then, an asset or an investment? If preference capital is to be treated as a loan, then is the dividend actually interest'?

Questions, hundreds of them, answers to which is more a matter of opinion than an established principle, are buzzing around the Indian accounting profession.

Yet, these appear mere pinpricks when you compared with the problems thrown up by aspects of taxation policy and the companies law.

Uncertainties

At a seminar on IFRS organised here by the Confederation of Indian Industry, experts rued that the authorities were yet to come out with a fundamental guideline as to whether from April 1 next year, the taxable profits will be computed according to existing Indian accounting standards or IFRS.

A committee has been formed comprising members from the Central Board of Direct Taxes and the Institute of Chartered Accountants of India. The committee will presumably first look into revenue implications for the Government rather than extend help to the corporate sector.

Beyond that nobody knows how the taxation regime will pan out I the IFRS era. The predominant view is that since only about a thousand companies will mandatorily migrate to IFRS on April 1 (see table), the Government will continue with the Indian GAAP (Generally Accepted Accounting Principles) for computing taxable profits.

If it is to be Indian standards for tax computation and IFRS for compliance with corporate legislation, it will be tough on accountants who will have to keep two separate books of accounts.

Yet, experts point out, it is not as simple as that. The Income-Tax Department being no spring chicken, the principal alarm in the corporate world is that the taxman will choose what suits him best, from Indian standards and IFRS, and you will end up with the worst of both worlds. A senior finance professional puts this succinctly: What is not income' today will become income', what is expenditure' will not be treated as expenditure.

For instance, under IFRS, preference capital is treated as a loan and you will charge preference dividend to Profit and Loss account, but the I-T Department will not let you call it expenditure'.

If you fair value' an asset (as opposed to the conservative cost method') and sell it, what will be the basis for calculating capital gains?

If you fair value your property, will the local municipal authorities not ask you to pay property tax on the basis of your own valuation?

Unless the haze of taxation clears first, there is bound to be chaos in the marketplace.

Balance sheets

Equally, the lack of alignment between the Companies law and IFRS has left the accountants nonplussed.

The familiar Schedule VI in which we are all used to reading the balance sheets will be (or ought to be) a relic in a few years because the format of presentation of the balance sheet under IFRS would be in according to a different prescription.

But the Companies Act will need to be amended to make way for a smarter presentation of financial statements than Schedule VI.

Leave aside the disconcerting fact that an overhaul of the Companies Act has been pending for nearly a decade and several avatars of the Companies Bill have come, and gone.

The current Bill does not seem to be in alignment with IFRS. Schedule VI is one example, but there are other issues, such as the classification of current and non-current assets.

Amid all this confusion, there seems to be one hope in the corporate world: That like the Companies Bill, the Direct Taxes Code, and a whole lot of other things, IFRS implementation will also get put off to a later date.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Software Outsourcing Company Offshore Software Outsourcing Software Outsourcing Company India Offshore Outsourcing Company India Software BPO Software Business Process Outsourcing Software Outsourcing India Offsho

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions