Companies need not maintain 2 account books: Finance ministry
October 18, 2011 08:21 AM |
Moneylife Digital Team
According to the proposal floated by the finance ministry, the
companies will be required to pay taxes as per the TAS, while books of
accounts will have to be maintained in accordance with the ICAI norms
notified under the Companies Act, 1961
New Delhi: Companies wanting to migrate to the International Financial
Reporting System (IFRS) may be spared from maintaining two books of
accounts—one under the Companies Act and the other for taxation
purposes—if a finance ministry proposal gets implemented, reports PTI.
The proposal, which was floated in a Discussion Paper on Tax
Accounting Standards (TAS) issued by the ministry on Monday, aims at
‘reducing the compliance burden on businesses’.
“It would be burdensome for affected tax payers to maintain two sets
of books of account i.e. one in accordance with the accounting
standards issued by the ICAI/notified under the Companies Act, 1956;
and another in accordance with the Accounting Standards notified under
the (Income Tax) Act.
“Accordingly, the accounting standards notified under the Act should
be made applicable only to the computation of taxable income and a
taxpayer should not be required to maintain books of account on the
basis of accounting standards notified under the Act,” the paper said.
According to the proposal, the companies will be required to pay taxes
as per the TAS, while books of accounts will have to be maintained in
accordance with the ICAI norms notified under the Companies Act, 1961.
“The proposed TAS, while enabling smooth transition to IFRS, will
provide certainty on accounting issues for tax purposes as it removes
alternatives and will cover all tax accounting issues,” the finance
ministry discussion paper said.
The Central Board of Direct Taxes (CBDT) has invited suggestions on
the paper, prepared by an expert committee, by 11 November 2011.
The committee was formed in 2010 to study the harmonisation of ICAI’s
accounting standards with the direct tax laws in India, suggesting
methods for determining tax base for the purpose of Minimum Alternate
Tax (MAT) in case of companies migrating to IFRS and appropriate
amendments to the Income Tax Act in view of transition to IFRS regime.
Though uncertainty still looms over the implementation date of the
IFRS, as per the earlier road map laid out by the MCA, companies will
have to prepare their accounts as per the new norm in a phased manner,
beginning with companies that have a networth of over Rs1,000 crore
from 1st April.
Further, while scheduled commercial banks and urban cooperative banks
will adopt IFRS from 1 April 2013, all insurance companies will have
to convert their opening balance sheets under IFRS from April 2012.
Large listed non-banking finance companies (NBFCs) will converge their
opening books of accounts with IFRS norms from 1 April 2013.
October 18, 2011 08:21 AM |
Moneylife Digital Team
According to the proposal floated by the finance ministry, the
companies will be required to pay taxes as per the TAS, while books of
accounts will have to be maintained in accordance with the ICAI norms
notified under the Companies Act, 1961
New Delhi: Companies wanting to migrate to the International Financial
Reporting System (IFRS) may be spared from maintaining two books of
accounts—one under the Companies Act and the other for taxation
purposes—if a finance ministry proposal gets implemented, reports PTI.
The proposal, which was floated in a Discussion Paper on Tax
Accounting Standards (TAS) issued by the ministry on Monday, aims at
‘reducing the compliance burden on businesses’.
“It would be burdensome for affected tax payers to maintain two sets
of books of account i.e. one in accordance with the accounting
standards issued by the ICAI/notified under the Companies Act, 1956;
and another in accordance with the Accounting Standards notified under
the (Income Tax) Act.
“Accordingly, the accounting standards notified under the Act should
be made applicable only to the computation of taxable income and a
taxpayer should not be required to maintain books of account on the
basis of accounting standards notified under the Act,” the paper said.
According to the proposal, the companies will be required to pay taxes
as per the TAS, while books of accounts will have to be maintained in
accordance with the ICAI norms notified under the Companies Act, 1961.
“The proposed TAS, while enabling smooth transition to IFRS, will
provide certainty on accounting issues for tax purposes as it removes
alternatives and will cover all tax accounting issues,” the finance
ministry discussion paper said.
The Central Board of Direct Taxes (CBDT) has invited suggestions on
the paper, prepared by an expert committee, by 11 November 2011.
The committee was formed in 2010 to study the harmonisation of ICAI’s
accounting standards with the direct tax laws in India, suggesting
methods for determining tax base for the purpose of Minimum Alternate
Tax (MAT) in case of companies migrating to IFRS and appropriate
amendments to the Income Tax Act in view of transition to IFRS regime.
Though uncertainty still looms over the implementation date of the
IFRS, as per the earlier road map laid out by the MCA, companies will
have to prepare their accounts as per the new norm in a phased manner,
beginning with companies that have a networth of over Rs1,000 crore
from 1st April.
Further, while scheduled commercial banks and urban cooperative banks
will adopt IFRS from 1 April 2013, all insurance companies will have
to convert their opening balance sheets under IFRS from April 2012.
Large listed non-banking finance companies (NBFCs) will converge their
opening books of accounts with IFRS norms from 1 April 2013.
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