TaxTMI 
TaxTMI 
Summary of ICDS -III- Consturction Contracts
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....ummary of ICDS -III- Consturction Contracts <br>News and Press Release<br>Dated:- 3-4-2015<br><BR>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 ....
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....accouting system W.e.f. 01/04/2015 i.e. Assessment year 2016-17 ICDS - III - Construction Contracts S. No. ICDS Particulars III Construction Contracts 1. Scope - Determination of income for a construction contract of a contractor 2. Terms used - Construction Contracts , Fixed Price Contracts ,Cost plus contract , Retentions, Progress billing and Advances 3. Calculation under this ICDS w....
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....ill be separately for each contract except where it is necessary it can be for a component of a contract or group of contracts together. 4. In case a contract have a number of assets, each separate asset will be treated as a separate contract if separate proposal and negotiation is there and also Cost and revenue is separately identified. 5. A group of contracts will be treated a single construc....
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....tion contract if they negotiated as a single package, they are interrelated and contracts are performed concurrently. Group of contracts may be with a single customer or multiple customers. 6. Any additional assets or amendment in existing construction contract will be treated a separate construction contract if the assets differs significantly or covered by original contract or separate negotiat....
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....ion has been done. 7. Contract revenue will be recognized on reasonable certainty of ultimate collection. 8. Contract cost shall include direct cost, allocated cost, contract or customer specific cost and allocated borrowing cost. Incidental income will be reduced. 9. Cost incurred for securing a contract will also include in contract cost. 10. Contract revenue an Contract cost will be recogni....
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....zed based on stage of completion of the contract at the reporting date. This is called percentage of completion method. 11. Under percentage of completion method contract revenue is matched with contract costs incurred up to the stage of completion. 12. The stage of completion will be determined on the basis of completion of a physical part of the contract work or survey of work performed or pro....
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....portion of the contract cost incurred. 13. During the early stage of contract where it is difficult to determine stage of completion, contract revenue will be recognized only to the extent of cost incurred.The early stage of a contract shall not extend beyond 25 % of the stage of completion. 14. In change of estimates of contract, only revised estimates will be considered in the change period an....
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....d subsequent periods. 15. Disclosures: Contract revenue recognized, Method to calculate Stage of completion, for contract in progress - cost incurred, advance received and retention amount.<BR> News - Press release - PIB....