DEFERMENT OF ICDS [SECTION 145(2)]
By notification No. 892(E) dated 31st March, 2015 issued by virtue of the powers conferred under Section 145(2) of the Income tax Act, 1961, the Central Government notified “Income Computation and Disclosure Standards” with effect from 1-4-2015 (AY 2016-17). These standards are applicable to the computation of income under the heads “Profits and gains of business or profession” and “Income from other sources”. The preamble states that if there is any conflict between the provisions of the Act and the ICDS, the latter will prevail.
Taxpayers are already grappling with regulatory changes of the Companies Act, 2013, Ind-AS and the proposed GST. Industry should be allowed more time to deal with another change of this nature. The Committee understands that the taxpayers feel that many of the provisions of the ICDS are capable of generating a legal debate about which at present there is no clarity.
Further, multiple accounting methods, one for the books of accounts and other for tax purposes, creates confusion, interpretation issues, multiplicity of records and additional compliance burden which may outweigh the gains to be obtained by the application of ICDS. It has also been felt by the Committee that ICDS deals only with the method of accounting and at best it brings timing difference on recognition of expenditure or income as compared to the books of account. The Committee therefore feels that a fuller study of the implications of the ICDS is necessary before it is implemented.
Accordingly the Committee recommends that the implementation of the ICDS be deferred by making a suitable amendment under section 145(2) of the Act.
When our present govt. is trying to make ease of many laws /rules / regulations, how can this type ruling can be accepted. The biggest enemy of the business is treatment of same transaction differs in each law , how it can be managed. Till how long some one can comply the law in true sense. By doing all these like regulation we just invite litigation and moreover the litigation will continue forever, generation to generation. Whether by doing this we are inviting business entity for our development or creating more problem for them. Unless the Govt.’s commitments and rules and regulations are on the same page, till that time there’ll be no real development.