Section 145(2), Central Govt. is empowered to notify ICDS for, applicable from A.Y 2017-18
Class of Person
Class of Income
Individual or HUF who is not required to get his accounts audited under section 44AB are not required to comply this ICDS.
Notified ICDS AND Corresponding Accounting Standard and IND AS
Name of ICDS
Corresponding Accounting Standard
Corresponding IND AS
ICDS – 1 Accounting Policy
AS – 1 Disclosure of Accounting Policy
IND AS – 1 Presentation of Financial Statements
ICDS -2 Valuation of Inventory
AS -2 Inventory
IND AS – 2 Inventories Accounting
ICDS -3 Construction Contracts
AS 7 – Construction Contracts
IND AS 115 AND IND AS 11
ICDS -4 Revenue Recognition
AS 9 – Revenue Recognition
IND AS 115 AND IND AS 18
ICDS – 5 Tangible Fixed Asset
AS 10 – Property, Plant and Equipment
IND AS 16 Property, Plant and Equipment
ICDS – 6 Effect of Foregin Exchange Rates
AS 11 – Effect of Foregin Exchange Rate
IND AS 21 - Effect of Foregin Exchange Rate
ICDS – 7 Government Grants
AS -12 Government Grants
IND AS 20 – Government Grant and Assitantance
ICDS – 8 Securities
AS 13 -Accounting for Investment
IND AS 40, 109, 105
ICDS – 9 Borrowing Cost
AS – 16 Borrowing Cost
IND AS -23 Borrowing Cost
ICDS – 10 Provision, Contingent Liability and Contingent Asset
AS -29 Provision, Contingent Liability and Contingent Asset
IND AS -37 Provision, Contingent Liability and Contingent Asset
ICDS applicable for income under head of PGBP or IFOS and not for maintenance of Books of Accounts.
In Case of Conflict between ICDS and Provision of Income Tax Acrt then the provision of Act prevail.
Main Aspect of Difference comparing to Income Tax Provision:-
1. ICDS -1
ICDS Specifically De-recognized concept of “Prudence and Materiality” in selection of accounting Policy.
Due to this under ICDS Market to Market Loss or any expected Loss is not allowed unless actually occurred or allowed by other ICDS.
2. ICDS -3
Specifically focused on Percentage of Completion Method for Recognition of Revenue and Cost under Construction Contract.
3. ICDS -6
In case of Non-Monetary items, Exchange difference arising on conversion shall not be recognized as Income or Expense.
4. ICDS 7
ICDS allowed recognition of Grant on receipt basis if condition fulfilled, Unlike in AS which allows recognition of Grant on Mercantile basis where there is certainty that grant will received and condition attached complied.
5. ICDS 8
Allow Subsequent Valuation of Security through Category wise and not for each security as allow in AS.
Lower of NRV or Cost
However it is to be noted that there is no such difference in Accounting Standard and ICDS in case of ICDS 2/4/5/9/10.
Major Points for Discussion:-
ICDS applicable to Non-Corporate assessee covered by Presumptive Taxation.(ICDS 3 and 4)
ICDS shall not apply while computation of MAT. How ever it shall apply while computation of AMT.
Net effect on income due to application of ICDS is to be disclosed under Return of Income and Tax Audit Report Form 3CD.
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