CBDT Accounting Standards Committee Submits Final Report
THE Finance Act, 1995 empowered the Central Government to notify the Accounting Standards to be followed for computing the income under the head "Profits and gains of business or profession" or "Income from other sources". The intention in framing the Standards under the Income-tax Act is to compute the income precisely and objectively.
In 1996, two Accounting Standards relating to disclosure of accounting policies and disclosure of prior period and extraordinary items and changes in accounting policies were notified. The Government constituted a committee in July 2002 for formulation of Accounting Standards for the purposes of notification under the Income-tax Act. This Committee recommended for notification of the Accounting Standards issued by the ICAI without any modification along with consequential legislative amendments to the Act for preventing any revenue leakage.
Subsequently, the CBDT has constituted the present Committee to harmonise the Accounting Standards issued by the ICAI with the provisions of the Act for the purposes of notification under the Act and also to suggest amendments to the Act necessitated by transition to Ind-AS/IFRS. The Committee comprised of brilliant professionals and knowledgeable officers from the Department.
The Committee examined all the thirty one Accounting Standards issued by the ICAI and noted that some of the Accounting Standards issued by the ICAI relate to ‘disclosure' requirement, whilst some other contain matter that are adequately dealt within the Act. The Committee recommends that Tax Accounting Standards need not to be notified in respect of seventeen Accounting Standards issued by the ICAI. The Committee formulated the drafts of Tax Accounting Standards on the issues covered by the rest of the fourteen Accounting Standards issued by the ICAI. The Committee while framing the Tax Accounting Standards, broadly, adhered to the principles of ‘reduction of litigation', ‘minimization of alternatives' and giving ‘certainty to issues'.
The Committee also recommends that the Accounting Standards to be notified under the Act may be termed as "Tax Accounting Standards" (TAS), to distinguish the same from the Accounting Standards issued by the ICAI.
The Committee has submitted Draft Tax Accounting Standards for the following:
Sl. No. | AS No. | Title of the Accounting Standard |
|---|---|---|
1. | AS-1 | Disclosure of Accounting Policies |
2. | AS-2 | Valuation of Inventories |
3. | AS-4 | Contingencies and Events Occurring After the Balance Sheet Date |
4. | AS-5 | Net Profit or Loss for the Period, Prior Period Items and changes in Accounting Policies |
5. | AS-7 | Construction Contracts |
6. | AS-9 | Revenue Recognition |
7. | AS-10 | Accounting for Fixed Assets |
8. | AS-11 | The Effects of Changes in Foreign Exchange Rates |
9. | AS-12 | Accounting for Government Grants |
10. | AS-13 | Accounting for Investments |
11. | AS-16 | Borrowing Costs |
12. | AS-19 | Leases |
13. | AS-26 | Intangible Assets |
14. | AS-29 | Provisions, Contingent Liabilities and Contingent Assets |
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