ICDS - A new paradigm for computing taxable income
On 31 March 2015, The Ministry of Finance has issued ten Income Computation and Disclosure Standards (ICDS), operationalising a new framework for computation of taxable income by all assesses. All assesses would be required to adopt these standards for the purposes of computation of taxable income under the heads “Profit and gains of business or profession” and “Income from Other Sources”. These standards are applicable for previous year commencing from 1 April 2015, i.e., Assessment Year 2016-17 onwards.
The notification of these ICDS is quite timely and important, especially considering that the timelines for adoption of Ind AS (IFRS converged standards) have also been notified, which permits voluntary adoption for financial year 2015-16. Providing a tax neutral framework for transition to Ind-AS was a prerequisite for smooth implementation of Ind AS from this year.
The adoption of ICDS will significantly alter the way companies compute their taxable income, as many of the concepts from existing Indian GAAP have been modified. This may also require changes to existing process and systems. This special edition of our First Notes provides an overview of key matters and roadmap for implementation of ICDS, along with our brief comments. The original notification can be downloaded from the link here.
© 2020 KPMG Assurance and Consulting Services LLP, an Indian Limited Liability Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.
KPMG (Registered) (a partnership firm with Registration No. BA- 62445) converted into KPMG Assurance and Consulting Services LLP (a Limited Liability partnership firm) with LLP Registration No. AAT-0367 with effect from July 23, 2020.