accounting standards is uncertain, use of the proposed tax accounting standards for MAT calculation will be determined later on. The Companies Bill, 2012, passed only in Lok Sabha, has in the meantime proposed the creation of a National Financial Reporting Authority (NFRA) to frame accounting norms under the company law that will determine book profits. ďNFRA will become the final body on matters related to accounting and auditing standards, we are made to understand," said SK Agrawal, president of ICAI.
Facing protests from the corporate sector over some of the recent tax demands, it has become imperative for the government now to take concrete steps to reduce litigation and to ensure tax certainty. At present, there is flexibility in the standards issued by ICAI that are notified under the Companies Act, which makes it possible to avoid or defer payment of taxes. TAS aims to reduce the options available to taxpayers in deferring tax payment.
Enforcing TAS is expected to significantly affect the tax liability of banks that have foreign branches as well as that of engineering and construction firms such as BHEL, L&T and Hindustan Construction, experts said.
* Realty cos must follow percentage completion method to book revenue from projects
* Engineering & construction firms cannot defer revenue recognition till project end
* Banks with overseas branches will have to pay taxes on forex gains