Section 145(2), Central Govt. is empowered to notify ICDS for, applicable from A.Y 2017-18
- Class of Person
- Class of Income
Exception:-
Individual or HUF who is not required to get his accounts audited under section 44AB are not required to comply this ICDS.
Notified ICDS AND Corresponding Accounting Standard and IND AS
|
Name of ICDS |
Corresponding Accounting Standard |
Corresponding IND AS |
|
ICDS – 1 Accounting Policy |
AS – 1 Disclosure of Accounting Policy |
IND AS – 1 Presentation of Financial Statements |
|
ICDS -2 Valuation of Inventory |
AS -2 Inventory |
IND AS – 2 Inventories Accounting |
|
ICDS -3 Construction Contracts |
AS 7 – Construction Contracts |
IND AS 115 AND IND AS 11 |
|
ICDS -4 Revenue Recognition |
AS 9 – Revenue Recognition |
IND AS 115 AND IND AS 18 |
|
ICDS – 5 Tangible Fixed Asset |
AS 10 – Property, Plant and Equipment |
IND AS 16 Property, Plant and Equipment |
|
ICDS – 6 Effect of Foreign Exchange Rates |
AS 11 – Effect of Foreign Exchange Rate |
IND AS 21 - Effect of Foreign Exchange Rate |
|
ICDS – 7 Government Grants |
AS -12 Government Grants |
IND AS 20 – Government Grant and Assistance |
|
ICDS – 8 Securities |
AS 13 -Accounting for Investment |
IND AS 40, 109, 105 |
|
ICDS – 9 Borrowing Cost |
AS – 16 Borrowing Cost |
IND AS -23 Borrowing Cost |
|
ICDS – 10 Provision, Contingent Liability and Contingent Asset |
AS -29 Provision, Contingent Liability and Contingent Asset |
IND AS -37 Provision, Contingent Liability and Contingent Asset |
Key Feature:-
1. ICDS applicable for income under head of PGBP or IFOS and not for maintenance of Books of Accounts.
2. In Case of Conflict between ICDS and Provision of Income Tax Act then the provision of Act prevail.
Main Aspect of Difference comparing to Income Tax Provision:-
1. ICDS -1
- ICDS Specifically De-recognized concept of “Prudence and Materiality” in selection of accounting Policy.
- Due to this under ICDS Market to Market Loss or any expected Loss is not allowed unless actually occurred or allowed by other ICDS.
2. ICDS -3
- Specifically focused on Percentage of Completion Method for Recognition of Revenue and Cost under Construction Contract.
3. ICDS -6
- In case of Non-Monetary items, Exchange difference arising on conversion shall not be recognized as Income or Expense.
4. ICDS 7
- ICDS allowed recognition of Grant on receipt basis if condition fulfilled, Unlike in AS which allows recognition of Grant on Mercantile basis where there is certainty that grant will received and condition attached complied.
5. ICDS 8
- Allow Subsequent Valuation of Security through Category wise and not for each security as allow in AS.
Like
|
Security |
Price |
NRV |
Lower of NRV or Cost |
Valuation |
|
A |
100 |
90 |
90 |
AS |
|
B |
100 |
120 |
100 |
AS |
|
Total |
200 |
210 |
200 |
ICDS |
Note: However it is to be noted that there is no such difference in Accounting Standard and ICDS in case of ICDS 2/4/5/9/10.
Major Points for Discussion:
1. ICDS applicable to Non-Corporate assessee covered by Presumptive Taxation.(ICDS 3 and 4)
2. ICDS shall not apply while computation of MAT. How ever it shall apply while computation of AMT.
3. Net effect on income due to application of ICDS is to be disclosed under Return of Income and Tax Audit Report Form 3CD.
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