INCOME COMPUTATION AND DISCLOSURE STANDARDS

The Ministry of Finance published 12 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 as notified dated 29 September 2016. 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. This Income Computation and Disclosure Standard 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. In the case of conflict between the provisions of the Income‐tax Act, 1961 and Income Computation and Disclosure Standard, the provisions of the Act shall prevail to that extent. ICDS are applicable to all Assesses i.e. Corporate & Non Corporate Assesses following mercantile system of accounting (other than an individual or a Hindu Undivided Family who is not required to get his accounts audited in accordance with the provisions of section 44AB of the Income-tax Act, 1961). Entity need not to maintain separate Books of accounts for ICDS. The difference between the accounting standards and ICDS may give rise to additional computations and reconciliations which in essence could result in the need for maintaining additional set of records .ICDS are meant for normal computation of income only. These will not be applicable for Minimum Alternate Tax (MAT) Calculation.

ICDS NO.	Name of the Standard	Corresponding AS
ICDS I	Accounting Policies	AS 1
ICDS II	Valuation of Inventories	AS 2
ICDS III	Construction Contracts	AS 7
ICDS IV	Revenue Recognition	AS 9
ICDS V	Tangible Fixed Assets	AS 10
ICDS VI	The Effects of Changes in Foreign Exchange Rates	AS 11
ICDS VII	Government Grants	AS 12
ICDS VIII	Securities	AS 13
ICDS IX	Borrowing Costs	AS 16
ICDS X	Provisions, Contingent Liabilities and Contingent Assets	AS 29