Indore: Provision of ICDS applicable to small tax-payers also

Staff ReporterUpdated: Monday, June 24, 2019, 11:13 AM IST
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Indore: Pankaj Shah, a senior income tax consultant, has said the newly introduced Income Computation and Disclosure Standards (ICDS) will be applicable to even small tax-payers, who file taxes under the presumptive taxation scheme. Under the scheme, a taxpayer pays a flat tax rate but does not need to maintain books of accounts.

Shah was illustrating about the provisions of ICDS to tax consultants in a workshop, ‘The Income Computation and Disclosure Standards,’ organised by the Tax Practitioners’ Association (TPA) here at TPA hall on Friday. Shah said that the Central Board of Direct Taxes (CBDT) has recently issued a circular in the form of FAQs dealing with various issues in implementation of ICDS.

He said that the Form 3CD i.e. the Audit Report u/s. 44AB has also been revised and the tax auditor will now have to certify the impact of the ICDS on the computation of the assessee. This adds to the onerous duty of the auditor and one needs to be well aware of the reporting requirements as well. The Income tax department says that the ICDS will prevail over judicial precedents given by the Supreme Court and High Courts in favour of the assessee.

Shah further said that the ICDS principles would apply to both market losses and gains. Further, the ICDS will be applicable even on income taxed on a gross basis like interest, royalty and fees from technical services. Provisions of the ICDS will not be applicable on computation of minimum alternate tax (MAT). The major effect of ICDS is that it will accelerate the point of taxation of income and defer the possibility to allowing deductions. Under the present times where the taxpayer is grappling from changes like Ind-AS, GST and other new laws, implementation of the ICDS will defeat the objective of ease of doing business and increase compliance costs.’

Shah also stated that returns to be filed after making various adjustments on account of ICDS while computing the total income for the year. The standards have generated a lot of controversies and there are doubts prevalent on the subject as regards the interpretation and implementation of the ICDS. Earlier, CA Anil Khandelwal, president TPA, stated that the workshop was organised with a view to understanding various intricate issues arising on the subject and also to find a probable solution.

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