INCOME TAX ACCOUNTING STANDARDS

INCOME TAX ACCOUNTING STANDARDS FOR COMPUTATION OF INCOME CHARGEABLE TO INCOME TAX

CBDT notified the ten “income computation and disclosure standards” 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”.

The Notified Standards are relating to :-

  1. Standard  I  relating  to  accounting policies
  2. Standard II relating to valuation of inventories
  3. Standard  III  relating  to  construction contracts
  4. Standard  IV  relating  to  revenue recognition
  5. Standard  V  relating  to  tangible  fixed assets
  6. Standard VI relating to the effects of changes in foreign exchange rates
  7. Standard  VII  relating  to  government grants
  8. Standard VIII relating to securities
  9. Standard IX relating to borrowing costs
  10. Standard X relating to provisions, contingent liabilities and contingent assets

Click here to read full content of Standards

However, It is clearly mentioned in Standards that 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 over the aforesaid standards to the extent of deviation.

Further, aforesaid standards is applicable only for the purpose of computation of income chargeable under  the head  “PGBP” or “IFOS” and not for the purpose of maintenance of books of accounts.

This notification vide 33/2015 shall come into force with effect from 1st day of April, 2015, and shall accordingly apply to the assessment year 2016-17 and subsequent assessment years.

See notification No.32/2015, F. No. 134/48/2010‐TPL, dated 31st March, 2015

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