CBDT postpones implementation of new accounting standards
July, 07th 2016
Giving more time for compliance, the Income Tax Department has postponed the implementation of ICDS, the new accounting standards for computation of business income, by a year.
Now, the Income Computation and Disclosure Standards (ICDS) will be applicable on the income earned in the current fiscal.
ICDS was notified by the government on April 1, 2015. It aims to ensure consistency and help minimise tax-related disputes.
"It has been decided that the ICDS shall be applicable from April 1, 2016 i.e. previous year 2016-17 (Assessment Year 2017-18)," the tax department said in a statement.
Revenue Secretary Hasmukh Adhia in a tweet also said that ICDS would be implemented from Assessment year 2017-18 in view of some of difficulties expressed.
"We hope that audit reports will now be ready by CAs (chartered accountants) in time this year," Adhia added.
Subsequent to ICDS notification on April 1, 2015, the Central Board of Direct Taxes (CBDT) received representations saying that certain provisions of ICDS may need further clarification for proper implementation.
The implementation issues in ICDS, which were raised by the stakeholders were referred to an expert committee comprising departmental officers and professionals.
"The Committee has recommended amendments to the notified ICDS and also issuance of clarification in respect of certain points raised by the stakeholders," the statement said.
The tax department said the revision of ICDS or issue of clarifications as recommended by the Committee, is under consideration.
Besides, the revision of the Tax Audit Report is also being made for ensuring the compliance with the provisions of ICDS and for capturing the disclosures mandated by the ICDS, it said.
Some of the taxpayers, the CBDT said, might have filed their return of income and obtained Tax Audit Report without incorporating the compliance with the ICDS and related disclosures in the absence of the revised Tax Audit Report.
Considering these facts, it has been decided that the ICDS shall be applicable from April 1, 2016.
ICDS is applicable for computation of income chargeable under the head profits and gains of business or profession or Income from other sources and not for the purpose of maintenance of books of accounts.
The ICDS notification came as a follow-up to the announcement made by Finance Minister Arun Jaitley in the July 2014 budget.