The Central Government had, vide Notification No.S.O.892(E) dated 31.3.2015, in exercise of the powers conferred by section 145(2), notified ten income computation and disclosure standards (ICDSs) to be followed by all assessees, following the mercantile system of accounting, for the purposes of computation of income chargeable to income-tax under the head “Profit and gains of business or profession” or “Income from other sources”. This notification was to be applicable from A.Y. 2016-17.
However, the Central Government has, vide Notification No.S.O.3078(E) dated 29.9.2016, rescinded Notification No.S.O.892(E) dated 31.3.2015. Simultaneously, vide Notification No.S.O.3079(E) dated 29.9.2016, the Central Government has notified ten new ICDSs to be applicable from A.Y.2017-18.
The newly notified ICDSs have to be followed by all assessees (other than an individual or a Hindu undivided family who is not required to get his accounts of the previous year audited in accordance with the provisions of section 44AB) following the mercantile system of accounting, for the purposes of computation of income chargeable to income-tax under the head “Profits and gains of business or profession” or “Income from other sources”, from A.Y.2017-18.
Since the relevant assessment year for May 2017 examination is A.Y.2017-18 and notifications and circulars issued upto 31.10.2016 are applicable for the said examination, the ICDSs notified on 29.9.2016 would be applicable from May 2017 examination.
The salient features of the ICDSs notified on 29.9.2016 as well as the significant changes vis-à-vis ICDSs notified on 31.3.2015 (since rescinded) have been given as Annexure to the Revision Test Paper (RTP) for Final Course [Group II], May 2017 examination. The text of these standards are given as Annexure to the December 2016 edition of the Practice Manual for Final Paper 7 Direct Tax Laws. Chapter 12 of this Practice Manual contains questions based on the ICDSs notified on 29.9.2016. Both the Practice Manual and the RTP for May 2017 Examination have been webhosted at the BOS Knowledge Portal on the Institute’s website www.icai.org.
As far as IIPCC Paper 4 Taxation [Part I: Income-tax] is concerned, the text of ICDSs notified on 29.9.2016 as well as the significant changes vis-à-vis ICDSs notified on 31.3.2015 (since rescinded) have been given as Annexure to October 2016 edition of the Practice Manual, which has also been hosted at the BoS Knowledge Portal. Students of IIPCC may note that they are only expected to have basic knowledge of the ICDSs.
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