ICDS: FinMin defers tax standards implementation by a year

 

Bringing relief to Corporate India, the Finance Ministry has deferred by one year the implementation of the income computation and disclosure standards (ICDS), which are commonly referred to as tax standards.

The ICDS-which had earlier come into effect from April 1, 2015 - will now be applicable from April 1, 2016, an official release said on Wednesday. This would mean that financial year 2016-17 would be the

first year of ICDS implementation.

ICDS are basically tax accounting standards notified by the Government to help compute taxable income of assesses following mercantile system of accounting, especially corporates. Till date, the Government had notified as many as 10 ICDS.

The introduction of ICDS was aimed at bringing increased consistency in computation and reporting of taxable income, reduce litigation and minimize the alternatives provided by the existing Accounting Standards issued by the CA Institute.

Reacting to this development, Amit Maheshwari, Partner, Ashok Maheshwary & Associates, a CA firm, said that the finance ministry has “listened” to the industry demand of deferring the implementation of ICDS as there were a host of issues that needed to be sorted out.

This will give time for industry to fully understand the nuance and prepare themselves for ICDS implementation for 2016-17 (assessment year 2017-18), he added.

Amit Singhania, Partner, Shardul Amarchand Mangaldas & Co, a law firm, said that deferment of ICDS is a welcome step. This is much required as it will give time to government to create necessary infrastructure like amendment of tax audit report etc for its smooth and effective implementation, Singhania said.