On 10 July 2014, the Finance Minister of India announced a roadmap and definite dates for convergence with the International Financial Reporting Standards (IFRS) for Indian companies as part of his Union Budget speech.
The Finance Minister proposed to make Indian Accounting Standards (Ind AS) converged with IFRS mandatory for Indian companies from the financial year 2016-17.
He also stated that ‘income computation and disclosure standards’ (tax accounting standards) would be notified separately. The Finance Bill, 2014 proposes that amendments to section 145 sub-section 2 of the Income Tax Act, 1961 which require the use of ‘income computation and disclosure standards’ to take effect from 1 April 2015 and in relation to the assessment year 2015-16 and subsequent years.
This is a significant development and will most likely apply to several companies. We discussed the implementation challenges put forth by the convergence with IFRS and use of tax accounting standards for the corporate
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