<h1>Government grants recognition and treatment: rules for allocation, timing, refunds and disclosure under accounting standards.</h1> ICDS VII governs tax accounting for government grants for mercantile assessees: recognition requires reasonable assurance of compliance and receipt and must not occur after realisation. Grants tied to depreciable assets are deducted from asset cost or asset block; grants for non depreciable assets or obligations are recognised as income over the period matching related costs; proportionate grants not tied to a specific asset are allocated to reference assets; grants compensating past losses are recognised when receivable; non monetary grants are recognised at acquisition cost. Refunds offset unamortised deferred credits or charge profit and loss, while refunds for depreciable assets increase asset cost/WDV prospectively. Disclosures must state the nature, extent and treatment of grants and reasons.