Budget to ring in new tax accounting norms
The introduction of TAS will also necessitate some changes in the tax return forms. The Central Board of Direct Taxes (CBDT) has been working on TAS in order to reduce the accounting alternatives allowed to taxpayers by the accounting rule maker ICAI in some of the 28 standards. The proposed TAS will be applicable for all income tax payers, not just corporate assessees. From the year TAS is implemented, taxpayers have to compulsorily follow it while calculating their income tax liability, which could be quite different from what is reported in the profit and loss account prepared as per the Companies Act.
However, sources said TAS may not immediately be made applicable to decide on the liability of having to pay MAT, which is based on book profits calculated as per the Companies Act that mandates use of ICAI’s standards.
Since ICAI’s implementation of IFRS-compliant 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. “NFRA 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
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