Difference between Tax Accounting Standards (TAS), Ind AS and AS on Construction Contracts
1 TAS is applicable to contractors whereas Ind AS is applicable to contractors and real estate developers
2 TAS defines Retentions, Progress billings and Advances whereas Ind AS and AS do not define such terms
3 TAS provides one principle for recognition of initial amount of revenue agreed in the contract, variations, claims and incentives whereas Ind AS provides separate criterion for including variations, claims and incentives as part of contract revenue
4 TAS provides that if income is subsequently written off in books of account as uncollectible, it should be recognised as an expense rather than adjusting contract revenue. This provision is handled by Ind AS 39, “Financial Instruments: Recognition and Measurement”. AS is silent on this aspect
5 TAS provides that contract costs are not to be reduced by incidental income in the nature of interest, dividend and capital gains. Ind AS 23 and AS 16 provide that any income earned from temporary investment of funds borrowed is to be deducted from borrowing costs
6 TAS provides a rule that if the stage of completion of the contract is beyond 25%, outcome of the contract can be estimated reliably whereas Ind AS and AS do not provide any such rule
7 TAS provides where outcome of the contract cannot be estimated reliably, contract revenue is recognised only to the extent of costs incurred whereas Ind AS and AS provide that where outcome of the contact cannot be estimated reliably, contract revenue is recognised only to the extent of recoverable costs
2 TAS defines Retentions, Progress billings and Advances whereas Ind AS and AS do not define such terms
3 TAS provides one principle for recognition of initial amount of revenue agreed in the contract, variations, claims and incentives whereas Ind AS provides separate criterion for including variations, claims and incentives as part of contract revenue
4 TAS provides that if income is subsequently written off in books of account as uncollectible, it should be recognised as an expense rather than adjusting contract revenue. This provision is handled by Ind AS 39, “Financial Instruments: Recognition and Measurement”. AS is silent on this aspect
5 TAS provides that contract costs are not to be reduced by incidental income in the nature of interest, dividend and capital gains. Ind AS 23 and AS 16 provide that any income earned from temporary investment of funds borrowed is to be deducted from borrowing costs
6 TAS provides a rule that if the stage of completion of the contract is beyond 25%, outcome of the contract can be estimated reliably whereas Ind AS and AS do not provide any such rule
7 TAS provides where outcome of the contract cannot be estimated reliably, contract revenue is recognised only to the extent of costs incurred whereas Ind AS and AS provide that where outcome of the contact cannot be estimated reliably, contract revenue is recognised only to the extent of recoverable costs
By
Manish Iyer
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