The Bombay Chartered Accountants Society has requested the Finance Minister, Arun Jaitley to scrap the Income Computation and Disclosure Standards (ICDS) – Sec. 145(2) of the Income-tax Act, 1961 [the Act]. The basic thrust of the 10 ICDS notified by the CBDT appears to be to prepone taxation of various items. The age old concept of taxing real income and commercial profit has been ignored. BCAS has launched a petition under change.org to urge that the ICDS should not just be deferred but should be withdrawn completely.
Sec. 145(2) authorises the Central Government to notify Income Computation and Disclosure Standards [ICDS] for the purposes of computation of income. CBDT has notified 10 amended ICDS vide notification dated 29th September, 2016 applicable to assessment year 2017-18 and subsequent assessment years, to be followed by all assessees (other than an individual or a HUF who is not required to get his accounts of the previous year audited in accordance with the provisions of section 44AB of the Act) following the mercantile system of accounting, for the purposes of computation of income chargeable to income-tax under the head “Profits and gains of business or profession” or “Income from other sources”.
The impact of ICDS can be enumerated as below:
• The amended Form 3CD requires a tax auditor to certify the adjustments to be made to the profit and loss in accordance with the provisions of ICDS. This will result in substantial work for most businesses and may even result in the requirement of parallel MIS, one for the purposes of regular accounts, and the other for the purposes of ICDS.
• Taxpayers are already grappling with regulatory changes of the Companies Act, 2013, Ind-AS and the proposed GST. Industry should be allowed more time to deal with another change of this nature.
• It is strongly felt that the revenue department has introduced section 145(2) and the ICDS, to reverse the impact of some of the decisions of the Supreme Court and various high courts, which were rendered in favour of the assessees. In the revenue’s zeal to take some corrective action, in respect of some perceived advantage taken by few assessees, a huge unproductive compliance burden without any substantial benefit to exchequer has been imposed on the business community, which is certainly not helping in improving the image of India as a favourable investment destination.
• ICDS is bound to create uncertainty and deterrence in the conduct of business in India and also militates against the professed policy of the Government to simplify the taxation system.
• Taxpayers would be required to keep and maintain dual set of books of account to comply with the requirement of ICDS and /or will have to spend considerable amount of time, energy and man hours in preparing and reconciling income as per ICDS and the one computed as per books of accounts maintained as per the applicable AS.
• There is bound to be a lot of controversy in interpretation of the ICDS and this will merely lead to enhanced litigation.
• Since some of the differences in accounting as per Ind AS/ ICDS would only be timing difference, it will lead to undue litigation without any corresponding benefit to the Revenue in long term.
In the event section 145(2) is not deleted and the notified ICDS are not withdrawn, the implementation thereof will create onerous burden on the assessees for compliance and will increase the paper work manifold without any substantial advantage to the Revenue. The above provision is clearly against the declared policy of the government of minimum government and maximum governance.
In fact, even the Income-Tax Simplification Committee, set up by Ministry of Finance and chaired by Justice R. V. Easwar (Retd.) in its report containing first batch of recommendations has rightly observed w.r.t. ICDS and has said that “ICDS deals only with the method of accounting and at best it brings timing difference on recognition of expenditure or income as compared to the books of account. The Committee therefore feels that a fuller study of the implications of the ICDS is necessary before it is implemented.”
At this very critical stage of the national economy when there is an urgent need for ensuring the ease of doing business in India and reducing all possible complexities and consequential legal disputes, on account of the following reasons, the petition urges that the ICDS should not just be deferred but should be withdrawn completely.
To sign the petition to demand the scrapping of the Income Computation and Disclosure Standards (ICDS) go to the following link
Newspapers this morning report that, on Tuesday ( 29th Nov ) , government will introduce in Lok Sabha , an amendment to Income Tax Act
As per this ( expected ) amendment , Black Money holders would be able to deposit , OLD notes ( Rs 500 / 1000 ) into their OWN bank accounts, with following proviso :
# Those willing to invest in GAREEB KALYAN YOJANA Bonds :
* Deposit old notes { before 30th Dec } and inform IT DEPT, desire to avail of Bonds
* Pay 30 % tax + 20 % penalty on this " Disclosed " but " Unaccounted " money
* 25 % locked in for 4 years in Gareeb Kalyan Yojana Bonds ( at 0 % interest )
* Keep / Use balance 25 % for PERSONAL USE
* Protection from further prosecution
# Those failing to avail of GAREEB KALYAN YOJANA Bonds :
* Deposit at any time ( before or after 30th Dec ) but fail to inform IT department
* Pay 30 % tax + 60 % penalty on this " Undisclosed " AND " Unaccounted " money
* Keep / use balance 10 % for PERSONAL USE
* Face prosecution if unable to explain ( - and possible 4 year jail term )
Dear Shri Narendrabhai :
If true , what you have planned is an improvement over the type of " Amnesty " that I had suggested in my email of 15 Nov 2016 ( to you and your Cabinet colleagues ) viz ;
{ http://myblogepage.blogspot.in/2016/11/take-wind-out-of-their-sail.html }
* Black Money Holder to deposit 100 % of his hidden / unaccounted money in specially
created Bank Accounts of :
Prime Minister Relief Fund / Armed Forces Relief Fund / Environment
Rejuvenation Fund / Pollution Solution Fund / Ban Mal Nutrition Fund ...etc
* No need to reveal identity / source of funds / Upper limit of deposit
* No prosecution but can keep / use 0 % for PERSONAL USE ( 100 % surrendered
to Govt )
HOW IS THIS AN IMPROVEMENT ?
Considering the following :
* As of yesterday , some Rs 65000 crore have been deposited in Jan Dhan Accounts
* At an ave of Rs 50,000 deposit per account , this may well represent 130 lakh accounts
* That is , deposit in 10 lakh account EACH DAY , for past 13 days ! And no letting up !
* But , in all , there are 25 Crore Jan Dhan accounts
* If Rs 2.5 lakh were to get deposited in each, that would amount to Rs 62.5 lakh*cr
* In a written reply in Lok Sabha last week , Minister of State for Finance , Santosh Kumar
Gangwar said that , as of Oct 31 , 2016 , 238 prosecution complaints have been filed and
and properties worth rs 18,866 cr have been attached
* Based on the information submitted by Indian Authorities to the US as part of
cooperation , the INSCR ( Integrated Network for Societal Conflict Research ) states ,
" ... the government has not won any court cases involving money laundering or
confiscations ... Money laundering investigations without a predicate offense are rarely
successfully prosecuted in the Indian judicial system and even if they are , the resulting
punishment is often minimal "
* As pointed out in my earlier E Mail ( 23 Nov ) , trying to prosecute few lakhs ( may be a
few crores ) of Jan Dhan account holders is SIMPLY IMPOSSIBLE !
In light of the foregoing and that proposed amendment to Income Tax Act , it would be
reasonable to assume that , between 01 Dec and 31st Dec , we may expect :
# Rs 10 lakh*crore to get deposited in bank accounts and declared to IT department
# Of this , Rs 2.5 lakh*crore worth of Gareeb Kalyan Yojana bonds to get issued.
How can we use this money for the ultimate Gareeb Kalyan ? Here is my suggestion :
Our 20 cr citizens below the poverty line ( BPL ) comprise 5 crore GAREEB families
If this bond amount of Rs 2.5 lakh*crore was to be deposited into the Jan Dhan bank
accounts of these 5 crore families , that would mean Rs 50,000 for each family !
And that simple arithmetic would save 12 lakh children dying from starvation each
year ! I cannot envisage a better use of BLACK MONEY !
# Political Parties handing over their own UNACCOUNTED monies to their loyal supporters
to deposit into their own bank accounts and buy those BONDS !
Retaining 50 % is any day better than losing 100 % !
Of course , when the Income Tax amendment gets introduced in Lok Sabha on Tuesday
expect the Opposition Parties to label NDA government as the biggest HAWALA
operator , who wants to compete with the road-side operators ( whose current going
rate is 30 % ) and converts your Black Money into White Money by taking 50 % cut !
Dear Shri Narendrabhai :
With the proposed Income Tax amendment , you would have won the current battle
But , in order to win the WAR ON BLACK MONEY , I request you once again to ,
EMBRACE THE INEVITABLE
{ http://myblogepage.blogspot.in/2016/11/embrace-inevitable.html }
---------------------------------------------------------------------------------------------------
26 Nov 2016
www.hemenparekh.in / blogs
This is relatively easy if one is a salaried employee. I don't know what business people do.