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Preamble In the case of conflict between the provisions of the Income-tax Act, 1961 („the Act‟) and this Income Computation and Disclosure Standard, the provisions of the Act shall prevail to that extent. Scope
1. This Income Computation and Disclosure Standard deals with provisions, contingent liabilities and contingent assets, except those: 2. This Income Computation and Disclosure Standard does not deal with the recognition of revenue which is dealt with by Income Computation and Disclosure Standard - Revenue Recognition. 3. The term „provision‟ is also used in the context of items such as depreciation, impairment of assets and doubtful debts which are adjustments to the carrying amounts of assets and are not addressed in this Income Computation and Disclosure Standard.
Definitions 4(2) Words and expressions used and not defined in this Income Computation and Disclosure Standard but defined in the Act shall have the meaning respectively assigned to them in the Act.
Recognition 6. No provision shall be recognised for costs that need to be incurred to operate in the future. 7. It is only those obligations arising from past events existing independently of a person‟s future actions (i.e. the future conduct of its business) that are recognised as provisions 8. Where details of a proposed new law have yet to be finalised, an obligation arises only when the legislation is enacted.
Contingent Liabilities
Contingent Assets 11. Contingent assets are assessed continually and when it becomes reasonably certain that inflow of economic benefit will arise, the asset and related income are recognised in the previous year in which the change occurs.
Measurement 13. The amount recognised as asset and related income shall be the best estimate of the value of economic benefit arising at the end of the previous year. The amount and related income shall not be discounted to its present value.
Reimbursements 15. Where a person is not liable for payment of costs in case the third party fails to pay, no provision shall be made for those costs. 16. An obligation, for which a person is jointly and severally liable, is a contingent liability to the extent that it is expected that the obligation will be settled by the other parties.
Review 18. An asset and related income recognised as provided in para 11 shall be reviewed at the end of each previous year and adjusted to reflect the current best estimate. If it is no longer reasonably certain that an inflow of economic benefits will arise, the asset and related income shall be reversed.
Use of Provisions
Transitional Provisions
Disclosure
21(2) Following disclosure shall be made in respect of each class of asset and related income recognised as provided in para 11:
Press Release of CBDT for Draft ICDS
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CBDT Notification 32/2015-Income Computation and Disclosure-Standards Click Here >>
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