New Delhi: In a pass to curtail discretion of real property gamers over how and once they comprehend revenue from tasks, the tax department has proposed to introduce new accounting standards for builders to compute their tax outgo.
The new wellknown could follow regardless of economic statements organized below the Companies Act for the benefit of shareholders and other regulatory functions.
The Central Board of Direct Taxes (CBDT), the apex direct-tax policymaking body of the authorities, on Thursday sought remarks on the draft Income Computation and Disclosure Standards (ICDS) on realty transactions by 26 May.
The draft is based totally on a steering be aware on the problem issued by accounting rule maker Institute of Chartered Accountants of India (ICAI), in step with an respectable statement.
The tax authority wishes uniformity in the manner realty corporations apprehend sales. At gift, there is diversity of their accounting due to the flexibility available beneath the present day way taxes are computed in addition to due to the fact that large groups have already migrated to IndAs, the brand new “honest-price based totally” accounting gadget obligatory from 1 April 2016 for companies with net well worth above Rs500 crore and their palms. Smaller corporations still comply with the Indian Generally Accepted Accounting Principles (GAAP).
While calculating the tax legal responsibility of a business enterprise, the earnings-tax branch typically makes certain adjustments to income reported within the financial statements underneath the accounting standards mandated by way of the Companies Act.