Corporate Affairs Minister Salman Khurshid today said the April 2011 deadline for the transition of Indian accounting standards to international norm IFRS will be met and all issues, especially those related to tax implications, have been resolved.
Khurshid’s statement comes days after industry body Ficci sought delay in the implementation of the International Financial Reporting Standard (IFRS) beyond April 2011, saying the deadline was “highly unworkable” and “unfair”.
“We have an international commitment to keep and will be well on schedule,” Khurshid said at an ICAI conference here.
The convergence would require minor amendment in the Companies Act, 1956 and some changes in the governing Acts of the three professional institutes — ICAI, ICWAI, and ICSI.
But the major issue that required attention was whether under the new accounting regime, companies would be taxed on notional loss or gain.
It needed discussions with the Income Tax Department, and according to Khurshid the deliberations have been done.
“All issues relating to tax implications have been worked out with the Finance Ministry,” he said, but did not elaborate on the discussions.
Finance Minister Pranab Mukherjee, who was also present at the event, commended the Institute of Chartered Accountants of India (ICAI) for taking the initiative to ensure a smooth transition to IFRS and underlined the need to spread awareness on the same.
“There is a need to educate and train all stakeholders concerned in this regard. We need to (look at) various laws and regulations so as to make them consistent with the IFRS converged standards,” Mukherjee said.
The ICAI taxation committee, which is helping the government prepare for the IFRS convergence, was also working on the tax implications to ensure a smooth transition.
According to the roadmap laid out by the Corporate Affairs Ministry, companies will have to prepare their accounts as per the new norm in a phased manner, beginning with companies that have a networth of over Rs 1,000 crore.
Further, while scheduled commercial banks and urban cooperative banks will adopt IFRS from April 1, 2013, all insurance companies will convert their opening balance sheets with IFRS from April 2012. Large, listed non-banking finance companies (NBFCs), will converge their opening books of accounts with IFRS norms from April 1, 2013.