ICDS IV Sets Revenue Recognition Rules for Business Income; Aligns with Income-tax Act, 1961; Details on Goods, Services, and More.
The Income Computation and Disclosure Standard (ICDS) IV, effective from Assessment Year 2017-18, governs revenue recognition for income under "Profits and gains of business or profession" or "Income from other sources." It prioritizes the Income-tax Act, 1961 in case of conflicts. Revenue from goods is recognized when ownership risks and rewards transfer to the buyer. Services use the percentage completion method, with exceptions for short-term contracts. Interest, royalties, and dividends are recognized based on specific criteria. Transitional provisions apply to ongoing transactions as of March 31, 2016. Disclosures include unrecognized revenue, recognized service revenue, and methods for determining service completion.
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