Income Computation and Disclosure Standards (ICDS) were issued by the Government of India in exercise of powers conferred to it under section 145(2) of The Income Tax Act, 1961.
The Ministry of Finance published 14 draft ICDS, out of which 10 ICDS were notified by the government on 31 March 2015. The government specified a deferment of one year from the date of implementation of these standards; the notified ICDS will be applicable from the financial year 2016-17.
ICDS were issued with the aim of bringing uniformity in accounting policies governing computation of income in accordance with tax related provisions, and also reducing the irregularities amongst them. The ICDS were developed using Generally Accepted Accounting Principles (GAAPs) with assistance from the Institute of Chartered Accountants of India.
The Form 3CD (Tax Audit Report) is already been revised for making mandatory disclosures in compliance with ICDS.
History The Central Board of Direct Taxes (CBDT) formed an Accounting Standards Committee which had earlier issued draft of 14 Tax Accounting Standards in 2012. On the basis of suggestions and comments received from stakeholders, CBDT revised and issued a 12 draft ICDS for public opinion. On 31 March 2015 the government issued 10 out of those 12 drafts.
Applicability ICDS are to be followed by all assesses, except individual or Hindu Undivided Family who are not covered under tax audit provisions, following Mercantile System of accounting.http://www.incometaxindia.gov.in/Documents/Notifica
List of Income Computation and Disclosure Standards ICDS NO.Name of the StandardCorresponding ASCorresponding Ind ASICDS IAccounting PoliciesAS 1Ind AS 1ICDS IIValuation of InventoriesAS 2Ind AS 2ICDS IIIConstruction ContractsAS 7Ind AS 115ICDS IVRevenue RecognitionAS 9Ind AS 115ICDS VTangible Fixed AssetsAS 10Ind AS 16ICDS VIThe Effects of Changes in Foreign Exchange RatesAS 11Ind AS 21ICDS VIIGovernment GrantsAS 12Ind AS 20ICDS VIIISecuritiesAS 13 Ind AS 32, 107 and 109ICDS IXBorrowing CostsAS 16Ind AS 23ICDS XProvisions, Contingent Liabilities and Contingent AssetsAS 29Ind AS 37
Miscellaneous provisions For the sake of be-verity and for the ease of tax payers, the notification provided several transitional provisions for the purpose of application of ICDS. Noncompliance of ICDS could result in best judgement assessment by tax authorities, which may lead to protracted litigations.
See also Income tax in India
References
External links Income Tax India Ministry of Finance ICAI