The Direct Taxes Committee of ICAI has published a “Technical Guide on Income Computation and Disclosure Standards (ICDS) – First Edition July, 2017”, in view of the fact that 10 Nos. ICDS notified by CBDT on 29 June 2016 are applicable from AY 2017-18 onwards for computation of taxable income by certain Assessees.
Last year the CBDT has notified Income Computation and Disclosure Standards (ICDSs), a new framework for computation of taxable income by all assessees (other than individual or a HUF who is not required to get his accounts of the previous year audited in accordance with the provisions of Section 44AB of the Income-tax Act, 1961) following the mercantile system of accounting for the purpose of computation of income under the heads “Profits and gains of business or profession” or “Income from other sources”.
The ICDSs became applicable w.e.f. April 1, 2016 and shall apply accordingly to the assessment year 2017-18 and subsequent assessment years. These ICDSs will be a new paradigm for computing taxable income of the assessee. Taxable profits would now be determined after making appropriate adjustments to the financial statements [whether prepared under existing AS or Ind AS] to bring them in conformity with ICDSs.
Through this technical guide, an effort has been made by the ICAI to gear up the members of our fraternity for implementation of ICDSs and to guide the stakeholders about the significant changes and impact which will take place in computation of taxable income. Reference to Indian Accounting Standards (Ind-AS) and Accounting Standards (AS), to the extent as considered necessary has been made at many places in this technical guide. Also, this publication will assist the members to remove the ambiguity and guide them in implementation of the ICDSs in a more effective manner.