Income Computation & Disclosure Standards (ICDS)
Issued by CBDT under power under section 145(2)of Income Tax Act, 1961 vide notification no. 32/2015, dated 31-3-2015
Purpose: Computation of Income under PGBP head and Income from Other sources head
Applicability: All assessee following mercantile accouting system
W.e.f. 01/04/2015 i.e. Assessment year 2016-17
ICDS - VII - Securities
S.No. | Scope of ICDS | Particulars |
VII | Government Grants | 1. Scope - Treatment of Grants. Grants may be in form of subsidies, cash incentives, duty drawbacks, waiver, concessions , reimbusement etc. |
2. Out of scope - Govt. assistance other than in the form of grants, Govt. participation in the ownership of enterprise. |
3. Terms used - Government :- Means CG, SG , agencies and similar bodies whether local, national or international. - Government Grants :- Assistance by govt. in cash or kind for past or future compliance of some conditions. - Exclusion:- Those assistance which can not measure in money terms and normal trading transactions with governments. |
4. Recognition of Government Grants - When there are reasonable assurannce that conditions attached with grants will be complied and grants will received. But recognition can not be after the date of realisation. |
5. 1 Treatment of Government Grants - In case of grants related to depreciable fixed assets or other assets, it will be deducted from the actual cost of the asset concerned or block of the assets as the case may be. - In case of grants related to non depreciable assets or assets which requires certain obligations, it will be recognised as income over the same period in which cost of meeting obligations charged. |
5.2 In case of grants not related to a particular asset, proportionate grant will be deducted from the assets in reference to which grants are received. |
5.3 In case of grants related to compensation for expenses or losses of previous years or to give immediate financial support, it will be recognised as income of the period in which it is receivable. |
5.4 In case of grants not covered in above 3 cases, it will be recognised over the same period for which period cost they are intended to compensate. |
5.5 In case of grants in the form of non monetary assets, concessional rate, it will be recongnised on the basis of acquisition cost. |
6. Refund of Government Grants - In case of non depreciable assets, grants not related to a particular asset and any other grants except grants received on depreciable assets, wil be set off against any unamortised deferred credit remaining. In case of no unamortised deferred credit or such amount is less than refund, then exceed refund amount will be charged to Profit & loss account. |
6.1 In case of depreciable fixed assets or assets, any refund amout will be setoff by increasing the actual cost or WDV of block of assets. For charging depreciation such increased amount will be taken into consideration prospectively. |
7. Disclosures - Nature and extent of grants recognised by way of deduction from the actual cost of the assets & vice versa , Nature and extent of grants recognised by way of as income & vice versa with reasons. |
Government grants recognition and treatment: rules for allocation, timing, refunds and disclosure under accounting standards. 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.
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