The Central Board of Direct Taxes (CBDT) has come up with new draft of 12 income computation and disclosure standards (ICDS).

The income tax department is looking to prescribe its own set of standards so as to ensure that income is computed correctly for income tax purposes.

The CBDT had in December 2010 constituted a committee to suggest standards. The first interim report was submitted in August 2011.

The final report along with draft of standards was submitted in August 2012 and placed in public domain for comments.

On the basis of the suggestions received from the stakeholders and examination of the same by CBDT, the draft standards submitted by the committee have been revised.

Now, the new draft of 12 ICDS is placed for public comments and stakeholders could give their comments by February 8, the CBDT has said.

The present draft has been issued in terms of the amendments carried out in Section 145 of the income tax law in the recent budget (Finance Act 2014). This amendment had suggested that accounting standards notified under the income tax law need to be regularly followed, said Aseem Chawla, Partner, MPC Legal, a law firm.

“It is imperative that in the process of adherence to the proposed income computation and disclosure standards, the generally accepted accounting principles be kept in sight lest inevitably two different accounting norms are required to be followed.

Consistently it has been suggested that taxpayers should maintain one set of accounts. In practice, this might be a daunting task to achieve in the wake of the new ICDS. Also, this should not be a convenient vehicle to overcome case laws through which income recognition concepts have been well settled through courts”, Chawla told Business Line.