tax accounting standards draft

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PRESSRELEASE

Subject:FinalReportoftheCommitteeconstitutedforformulatingAccounting

Standardsforthepurposesofnotificationundersection145(2)oftheIncome

taxAct,1961.

)


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ACCOUNTINGSTANDARDSCOMMITTEE

FINALREPORT

GOVERNMENTOFINDIAMINISTRYOFFINANCE

DEPARTMENTOFREVENUECENTRALBOARDOFDIRECTTAXES

AUGUST2012


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CONSTITUTIONOFTHECOMMITTEE

Convenor

Members


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CONTENTS

S.No. Chapter Subject PageNos.

iii


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P R E F A C E


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v


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1

Chapter1

Background


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2


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3

Chapter2

PresentAccountingStandardsCommittee


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4

Chapter3

Approach

(1) Twosetsofbooksofaccount

Issue

Recommendations


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This Tax Accounting Standard is applicable for computation of income

chargeable under the head Profits andgains of business orprofession or

Incomefromothersourcesandnotforthepurposeofmaintenanceofbooks

ofaccount.

(2)

Applicability

of

TAS

Issue

Recommendation

(3) ConflictbetweentheprovisionsoftheActandtheTAS


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Issue

Recommendation

In the case of conflict between theprovisions of the IncometaxAct,

1961

and

this

Tax

Accounting

Standard,

the

provisions

of

the

Income

taxAct,1961shallprevailtothatextent.

(4) TransitiontoTAS

Issue

Recommendation


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(5) EnsuringcompliancewithTASbythetaxpayer

Issue

Recommendation:


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Chapter4

HarmonisationofAccountingStandards


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AS3CashFlowStatements

AS14AccountingforAmalgamations


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AS15EmployeeBenefits

i.

ii.

iii.


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AS17SegmentReporting


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13

AS18RelatedPartyDisclosures

AS24DiscontinuingOperations


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AS27FinancialReportingofInterestsinJointVentures

AS30,31,32FinancialInstruments(RecognitionandMeasurement,Presentation

andDisclosure)


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Chapter5

DraftTaxAccountingStandards


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TAXACCOUNTINGSTANDARDFORACCOUNTINGPOLICIES


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18

TAXACCOUNTINGSTANDARDFORVALUATIONOFINVENTORIES


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19

TAXACCOUNTINGSTANDARDFOREVENTSOCCURINGAFTERTHEENDOFPREVIOUS

YEAR

TAXACCOUNTINGSTANDARDFORPRIORPERIODEXPENSE


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20

TAXACCOUNTINGSTANDARDFORCONSTRUCTIONCONTRACTS


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21

TAXACCOUNTINGSTANDARDFORREVENUERECOGNITION


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TAXACCOUNTINGSTANDARDFORTANGIBLEFIXEDASSETS


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TAX ACCOUNTING STANDARD FOR THE EFFECTS OF CHANGES IN FOREIGN

EXCHANGERATES


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TAXACCOUNTINGSTANDARDFORGOVERNMENTGRANTS


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.

TAXACCOUNTINGSTANDARDFORSECURITIES

TAXACCOUNTINGSTANDARDFORBORROWINGCOSTS


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TAXACCOUNTINGSTANDARDFORLEASES


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TAXACCOUNTINGSTANDARDFORINTANGIBLEASSETS

TAX ACCOUNTING STANDARD FOR PROVISIONS, CONTINGENT LIABILITIES AND

CONTINGENTASSETS


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Chapter6

InterimReports


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Chapter7

LimitedrevisionofdraftsofTASsubmittedalongwiththeinterim

reports

TASonIntangibleAssets

10. Wherean intangibleasset isacquired inexchangeforsharesorothersecurities, the

assetshallberecordedatthefairvalueofthesecuritiesissued.

13. Where an intangible asset is acquired in exchangefor another asset, its actual cost

shallbedeterminedbasedonthefairvalueoftheassetgivenup.

14. Theactualcostofanintangibleassetshallbeadjustedsubsequenttoitsacquisitionon

accountofpriceadjustment,changesindutiesorsimilarfactors


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10. When an intangible asset is acquired in exchangefor shares or other securities the

assetshallberecordedatitsfairvalueorthefairvalueofthesecuritiesissued,whicheveris

lower.

13. When an intangible asset is acquired in exchangefor another asset, its actual cost

shallberecordedatitsfairvalueorthefairvalueoftheassetgivenup,whicheverislower.

14. Thecostofanintangibleassetmayundergochangessubsequenttoitsacquisitionon

accountof:

(i) priceadjustment,changesindutiesorsimilarfactors;or

exchangefluctuationasspecifiedinTaxAccountingStandardforTheEffectsof

ChangesinForeignExchangeRates.

TaxAccountingStandardforValuationofInventories

Shares, debentures and otherfinancial instruments held as stockintrade which are dealt

withbytheTaxAccountingStandardonInvestments;

Shares, debentures and otherfinancial instruments held as stockintrade which are dealt

withbytheTaxAccountingStandardforSecurities;


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DissolutionofPartnershipFirm24. In case of dissolution of a partnership firm, notwithstanding whether business is

discontinued or not, the inventory on the date of dissolution shall be valued at the net

realisablevalue;

DissolutionofPartnershipFirmorAssociationofPersonsorBodyofIndividuals24. In case of dissolution of a partnership firm or association of persons or body of

individuals,notwithstanding whether business is discontinued or not, the inventory on the date of its

dissolution

shall

be

valued

at

the

net

realisable

value;


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Chapter8

OthertermsofreferenceIFRSandIndAS


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AnnexureAF. No. 134/48/2010-SO (TPL)

Government of India

Ministry of FinanceDepartment of Revenue

Central Board of Direct Taxes****

Dated: 20th December, 2010

ORDER

Subject: Constitution of Accounting Standard Committee regarding

CBDT has constituted a committee comprising of the following member forformulation of Accounting Standard to be notified under sub section (2) of section145 of the Income Tax Act, 1961(the Act) and to suggest appropriate amendments tothe Act required on account of transition to IFRS regime:-

(i) Shri H. Srinivasulu, CIT-2, Hyderabad, as Convenor(ii) Shri Pravin Kumar, CIT (A)-40, Mumbai, Member(iii) Shri Pawan Kumar, Director, CBDT, Member

(iv) Shri Ankur Garg, Addl. CIT, Mumbai, Member(v) Shri Rajesh Bhoot, Director, CBDT, Member Secretary(vi) Shri M.P. Lohia, Executive Director, E&Y, Mumbai, Member(vii) Shri Kamlesh Vikamsey, C.A., Member(viii) Shri Jamil Khatri, C.A., Member(ix) Shri Milin Mehta, C.A., Member

2. The term of reference of the committee are as under: -

i) to study the harmonization of all accounting standards issued by ICAI withthe direct tax laws in India, and suggest accounting standards which need tobe adopted under section 145(2) of the Act along with relevant modifications;

ii) to suggest method of determining tax base (book profit) for the purpose ofMAT in case of companies migrating to IFRS in the initial year of adoptionand thereafter.

3. Committee may submit its interim report by 15th February, 2011 and its finalreport by 31st March, 2011.

(M. Rajan)Under Secretary (TPL-III), CBDT

Mob.: 09717308858


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Copy to:-

(i) Shri H. Srinivasulu, CIT-2, Hyderabad(ii) Shri Pravin Kumar, CIT (A)-40, Mumbai(iii) Shri Pawan Kumar, Director, CBDT(iv) Shri Ankur Garg, Addl. CIT, Mumbai(v) Shri Rajesh Bhoot, Director, CBDT(vi) Shri M.P. Lohia, Executive Director, E&Y, Mumbai(vii) Shri Kamlesh Vikamsey, C.A.(viii) Shri Jamil Khatri, C.A.(ix) Shri Milin Mehta, C.A.

with a request to acknowledge the receipt of this order by sending e-mail [email protected] at their earliest convenience.


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F. No. 134/48/2010-SO (TPL)

Government of IndiaMinistry of Finance

Department of RevenueCentral Board of Direct Taxes

****

New Delhi, dated the 19th January,2011.

ORDER

Subject: Nomination of Shri J. Krishna Kishore, AdditionalCommissioner of Income Tax, Hyderabad as a member in the

Accounting Standard Committee regarding.

You have been nominated as member to the Accounting StandardCommittee constituted by the CBDT vide Order dated 20 th December, 2010 inF.No.134/48/2010-SO(TPL).

2. This issues with the approval of Member(L&C).

(M. Rajan)Under Secretary (TPL-III), CBDT

Mob.: 09717308858To

Shri J. Krishna Kishore,

Additional Commissioner of Income Tax,

Range-2, 8th Floor, B-Block, Income Tax Towers,

Masab Tank, Hyderabad 500 004.

e-mail : [email protected]

Copy to :

(i) Shri H. Srinivasulu, CIT-2, Hyderabad(ii) Shri Pravin Kumar, CIT (A)-40, Mumbai(iii) Shri Pawan Kumar, Director, CBDT(iv) Shri Ankur Garg, Addl. CIT, Mumbai(v) Shri Rajesh Bhoot, Director, CBDT(vi) Shri M.P. Lohia, Executive Director, E&Y, Mumbai(vii) Shri Kamlesh Vikamsey, C.A.(viii) Shri Jamil Khatri, C.A.(ix) Shri Milin Mehta, C.A.


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Annexure

B

ListofAccountingStandardsissuedbytheICAIwhicharenot

recommendedfornotificationundertheActbytheCommittee

Sl.No. ASNo. TitleoftheAccountingStandard


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AnnexureC

ListofAccountingStandardsissuedbytheICAIwhichare

harmonisedwiththeprovisionsoftheActforthepurposesof

notificationundertheAct

Sl.No. ASNo. TitleoftheAccountingStandard


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AnnexureD

ThetextofthedraftTaxAccountingStandardsformulatedbythe

CommitteeforthepurposesofnotificationundertheAct

Sl. No. TitleofTaxAccountingStandard PageNo.

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

13.

14.


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TaxAccountingStandard[TAS]

AccountingPolicies

Preamble

Scope

FundamentalAccountingAssumptions

Going

Concern


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Consistency

Accrual

AccountingPolicies

ConsiderationsintheSelectionandChangeofAccountingPolicies


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DisclosureofAccountingPolicies


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ValuationofInventories

Preamble

Scope


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Definitions

Inventories

Netrealizablevalue

Measurement


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CostofInventories

CostsofPurchase

CostsofServices

CostsofConversion


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OtherCosts

ExclusionsfromtheCostofInventories


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CostFormulae

FirstinFirstoutandWeightedAverageCostFormula


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RetailMethod

NetRealisableValue


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ValueofOpeningStock

Changeof

Method

of

Valuation

of

Inventory

DissolutionofPartnershipFirm


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Disclosure


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EventsOccurringAftertheEndofPreviousYear

Preamble

Scope

Definitions

Eventsoccurringafterendof thepreviousyear


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Recognition

Disclosure


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PriorPeriodExpense

Preamble

Scope

PriorPeriodExpense


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Disclosure


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ConstructionContracts

Preamble

Scope

Definitions

constructioncontract


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fixed price contract

cost plus contract

Retentions

Progress billings

Advances


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Combiningand

Segmenting

Construction

Contracts


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ContractRevenue

ContractCosts


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RecognitionofContractRevenueandExpenses


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ChangesinEstimates

Disclosure


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RevenueRecognition

Preamble

Scope


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Definitions

Revenue

Saleof

Goods


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Renderingofservices

mutatis

mutandis

TheUseofResourcesbyOthersYieldingInterest,RoyaltiesorDividends

Disclosure


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TangibleFixedAssets

Preamble

Scope

Definitions

Tangiblefixedasset

Fair value


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IdentificationofTangibleFixedAssets

ComponentsofActualCost


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SelfconstructedTangibleFixedAssets

NonmonetaryConsideration


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ImprovementsandRepairs

ValuationofTangibleFixedAssetsinSpecialCases


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Depreciation

Transfers

TangibleFixed

Assets

Register


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Disclosures


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TheEffectsofChangesinForeignExchangeRates

Preamble

Scope

Definitions


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closingrate

exchange difference

exchangerate

fairvalue

foreigncurrency

foreignoperationsofaperson

foreign currency transaction


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forward exchange contract

forwardrate

Indiancurrency

integralforeignoperation

monetaryitems

nonintegralforeignoperation

nonmonetary items

reporting currency


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ForeignCurrencyTransactions

InitialRecognition

ConversionatLastDateofPreviousYear

RecognitionofExchangeDifferences


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Exceptionstoparagraph4,5and6

FinancialStatementsofForeignOperations

ClassificationofForeignOperations


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IntegralForeign

Operations

NonintegralForeignOperations


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ChangeintheClassificationofaForeignOperation

ForwardExchangeContracts


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GovernmentGrants

Preamble

Scope


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Definitions

Government

Government grants

RecognitionofGovernmentgrants

TreatmentofGovernmentgrants


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RefundofGovernmentGrants


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Disclosures


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TaxAccountingStandard(TAS)

Securities

Preamble

Scope


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Definitions

Fairvalue

Securities

Recognitionand

initial

measurement

of

securities


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Subsequentmeasurementofsecurities


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BorrowingCosts

Preamble

Scope

Definitions

borrowing costs


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qualifyingasset

Recognition


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BorrowingcostsEligibleforCapitalisation


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CommencementofCapitalisation

CessationofCapitalisation


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Disclosure


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Leases

Preamble

Scope


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Definitions

(a) lease

(b) financelease

(c)

operatinglease

(d) noncancellablelease

(e) inceptionof the lease

(f) leaseterm


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(g) Minimum lease payments

(h) Fairvalue

(i) Economiclife

(j) Usefullife


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(k) Residualvalue

(l) Guaranteedresidualvalue

(m)Unguaranteedresidual

value

(n) interest rate implicit in the lease

(o) lessees incrementalborrowingrateof interest

(p) Contingent rent


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ClassificationofLeases


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TaxTreatmentofLeasesincaseofLessees

FinanceLeases


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OperatingLeases

TaxTreatmentofLeasesincaseofLessors

FinanceLeases


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OperatingLeases

SaleandLeasebackTransactions


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IntangibleAssets

Preamble

Scope


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Definitions

intangible asset

asset

Monetary assets

Non

monetary

assets

Research

Development


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Depreciation

Depreciableamount

Fair value

Written down value

financialasset

.

IdentificationofIntangibleAssets


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RecognitionandInitialMeasurementofanIntangibleAsset


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InternallyGeneratedIntangibleAssets

(a)

(b)


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ActualCostofanInternallyGeneratedIntangibleAsset


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SubsequentExpenditure


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Depreciation

Transfers

Disclosures


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*******


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Provisions,ContingentLiabilitiesandContingentAssets

Preamble

Scope


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Definitions

provision

liability

obligatingevent

contingentliability


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contingent asset

Executory contracts

present obligation

Recognition

Provisions


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ContingentLiabilities

ContingentAssets

.


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Measurement

BestEstimate

.

Reimbursements

Review


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Useof

Provisions

.

Disclosure


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