New Delhi: The income tax department on Thursday clarified that the income computation and disclosure standards (ICDS) will prevail over judicial precedents with effect from April 2016.
ICDS are a set of 10 standards that will change the way companies calculate income in India. The ICDS norms were initially notified with effect from financial year 2015-16 but its implementation was deferred by a year to 2016-17 after taxpayers expressed concern over some of the provisions.
On Thursday, the income tax department issued a set of 25 frequently asked questions to address queries by companies over its implementation.
It has clarified that ICDS will be applicable on companies irrespective of the accounting standards they follow.
ICDS will also be applicable to even those small taxpayers who file taxes under the presumptive taxation scheme. Under this scheme, taxpayers pay a flat tax rate but do not need to maintain their books of accounts. Further, ICDS principles will apply to both mark-to-market losses and gains. Further, ICDS will be applicable even on income taxed on a gross basis like interest, royalty and fees from technical services.
Provisions of ICDS will not be applicable on computation of minimum alternate tax (MAT), the tax department clarified.