International Computation and Disclosure Standards (ICDS)
In 2010, when Ministry of Corporate Affairs (MCA) had announced converging Indian financial reporting with IFRS in a phased manner, one of the biggest challenges faced by corporate sector was how this change in financial reporting would impact taxable income, as many Companies would report using Indian-Accounting Standards (Ind-AS) while others would report using the Accounting Standards (AS) issued by Accounting Standards Board of Institute of Chartered Accountant of India (ICAI) .
In response, the CBDT set up a committee in 2010 to look at the taxation related aspects of Ind-AS implementation. They also recognized it as an opportunity to address certain accounting issues that have been a subject matter of tax litigation due to either diversity in accounting practices or divergence in views between tax payers and tax authorities.
The CBDT committee issued 14 draft ICDS for public comments in October 2012. Over two years since then, on 02-Jan-2015 MCA via press release no. 11/10/2009 CL-V notified the list of Companies to whom Ind-AS is applicable. Hence on 08-Jan-2015, CBDT issued revised twelve ICDS for final comments. Finally 10 ICDS has been issued by CBDT via notification no. 33/2015.
The ICDS is applicable for computation of income chargeable under
Profits and Gains from Business and Profession (PGBP)
Income From Other Sources (IFOS)
The ICDS are issued for computation of taxable income under above mentioned source and it is not for maintenance of separate sets of books of accounts.
In case of conflict between the provision of Income Tax Act, 1961 (‘the Act’) and ICDS, the Act prevails to that extent.
List of Notified ICDS:-
|ICDS No.||Name of ICDS||Relevant AS|
|2||Valuation of Inventories||2|
|5||Tangible Fixed Asset||10|
|6||Effect of change in foreign exchange rates||11|
|10||Provisions, Contingent liabilities and Contingent Assets||29|