Sunday, 23 April 2017

Few Points on ICDS

(a)  ICDS will decide the turnover  required to be computed for Presumptive taxation
(b)  The CBDT issued a FAQ on March 23, 2017 and details of same available  at following link.
(c)  ICDS applicable only to Income from business/profession and Income from other sources
(d)  The concept of prudence is no more applicable and hence no expected loss being applicable
(e)  Unlike accounting standard which uses word “shall’, the ICDS uses the word “should” only.
(f)   For 9 ICDS, there are transitional provisions.
(g)  In case there is no Tax audit, then the disclosure of ICDS required to  be made at computation.
(h)  For computation of service work in progress, there are  following  method
Ø  Physical measurement
Ø  Estimated Cost
(i)    Act & rules both  will prevail over ICDS but the supreme court judgement are debatable.
(j)    For construction contract, the transitional provision is that  for existing old pprojects, they can continue with their old method till their completion.
(k)  Provide for interest income in case the customer contract mention the same and in case same is debatable, then  provide for bad debt u/s 36(1)(vi).
(l)    Capitalise all interest expenses even the duration of creation  of asset is less than 12 months.
(m) Provision of expenses must be reasonable
(n)  Recognition of contingent asset.
(o)  Section 115A -  Tax on special case -  ICDS applicable
(p)  Any change is accounting policy is retrospective and any change in accounting estimate is prospective.
(q)  ICDS not applicable to assesse who follow cash system. Also  not applicable to Individual/ HUF who not subject to tax audit.
(r)   No completed contracted method  (CCM) now exist, only PCM ( Percentage Completion Method).