New accounting standards for computing biz income from today

The government today notified new accounting standards for computation of business income, which will ensure consistency and help minimise tax-related disputes.
The Income Computation and Disclosure Standard (ICDS), the notification said, "is applicable for computation of income chargeable under the head 'Profits and gains of business or profession' or 'Income from other sources' and not for the purpose of maintenance of books of accounts".
The notification relating to 10 accounting standards comes as a follow up to the announcement made by Finance Minister Arun Jaitley in the July 2014 budget of the intent to notify these standards.
These standards are applicable from April 1, 2015.

"ICDS were developed with a view to minimising tax related disputes by bringing greater consistency in the application of accounting principles governing the computation of income," KPMG (India) Partner and Head (Accounting Advisory) Services Sai Venkateshwaran said.
These standards were developed using the old Indian General Audit and Accounting Practices (GAAP) as a base, he said, adding they also include modifications to make them suitable for tax purposes.
In case of conflict between the provisions of the Income-Tax Act, 1961 and ICDS, then the provisions of the Income-Tax Act would prevail, Venkateshwaran added.