If ICDS not followed in preparing return ,AO may do Best judgment assessment

By | June 16, 2016
(Last Updated On: June 16, 2016)

Income computation and disclosure standards

Income computation and disclosure standards are mandatory from AY 2016-17 as per Notification  NO.32/2015 [F. NO. 134/48/2010-TPL]/SO 892(E) Dated 31.03.2015

 Central Government notified the income computation and disclosure standards to be followed by all assessees, following the mercantile system of accounting, for the purposes of computation of income chargeable to income-tax under the head “Profit and gains of business or profession” or ” Income from other sources”. This notification shall come into force with effect from 1st day of April, 2015, and shall accordingly apply to the assessment year 2016-17 and subsequent assessment years.
As per Section 145 of the Income Tax Act , if these Standards are not followed then the Assessing Officer can make Best judgement Assessment i.e the Assessing Officer shall make the assessment of the total income or loss to the best of his judgment and determine the sum payable by the assessee on the basis of such assessment.


Section 145 of the Income Tax Act 

Method of accounting.

145. (1) Income chargeable under the head “Profits and gains of business or profession” or “Income from other sources” shall, subject to the provisions of sub-section (2), be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee.

(2) The Central Government may notify in the Official Gazette from time to time  income computation and disclosure standards to be followed by any class of assessees or in respect of any class of income.

(3) Where the Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee, or where the method of accounting provided in sub-section (1) has not been regularly followed by the assessee, or income has not been computed in accordance with the standards notified under sub-section (2) , the Assessing Officer may make an assessment in the manner provided in section 144.

List of  Income Computation and Disclosure Standard Issued by 

  1. ICDS I – Income Computation and Disclosure Standard -I  (Accounting Policies)
  2. ICDS II -Income Computation and Disclosure Standard-II (Valuation of Inventories )
  3. ICDS III -Income Computation and Disclosure Standard -III (Construction Contracts)
  4. ICDS IV -Income Computation and Disclosure Standard IV (Revenue Recognition )
  5. ICDS V – Income Computation and Disclosure Standard V (Tangible fixed assets )
  6. ICDS VI -Income Computation and Disclosure Standard VI (Effects of Changes in Foreign Exchange Rates)
  7. ICDS VII -Income Computation and Disclosure Standard VII (Government Grants )
  8. ICDS VIII -Income Computation and Disclosure Standard VIII ( Securities )
  9. ICDS IX-Income Computation and Disclosure Standard IX (Borrowing Costs )
  10. ICDS X- Income Computation and Disclosure Standard X (Provisions, Contingent Liabilities and Contingent Assets)
  11. Key Takeaway of ICDS -Income Computation and Disclosure Standard
Direct Taxes Ready ReckonerService Tax Ready ReckonerCompany Law Ready Reckonertax deduction at source
New Books Released on Tax , GST and law

Leave a Reply

Your email address will not be published. Required fields are marked *