Report regarding framework for computation of book profit for the purposes of levy of Minimum Alternate Tax (MAT) under section 115JB of the Income-tax Act, 1961 for Indian Accounting Standards (Ind AS) compliant companies in the year of adoption and thereafter

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....r section 115JB of the Income-tax Act, 1961 for Indian Accounting Standards (Ind AS) compliant companies in the year of adoption and thereafter - reg. Kindly refer to the interim report dated 18th March, 2016 submitted by the Committee on the above subject. The comments/ suggestions received from stakeholders on the interim report, which was placed in the public domain vide Press Release dated 28th April, 2016, have been examined by the Committee. 2. The recommendation/ suggestions on the main issues relating to first time adoption raised by the stakeholders are as under. I. Fixed Assets - Adjustment to retained earnings Issue: As per Indian Accounting Standard (Ind AS) 101, First-time Adoption of Indian Acc....

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....profits. • Depreciation shall be computed ignoring the amount of aforesaid retained earnings adjustment. • Similarly, gain/loss on realisation/ disposal/ retirement of such assets shall be computed ignoring the aforesaid retained earnings adjustment. • Other adjustments to fixed assets (like Decommissioning Liability, Foreign exchange capitalisation/decapitalization, Borrowing costs adjustments etc.) on the date of transition shall also be ignored in a similar manner. The same principles shall also apply to Intangible assets (Ind AS 38). II. Leases - Straight lining of lease rentals Issue: As per Indian Accounting Standard (Ind AS) 17, Leases, lease payments under an....

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....under AS 19. C. The retained earnings adjustment should be included in the book profit over a period of three years starting from the year of first time adoption of Ind AS. Considering the dual aspects of significant one time charge and simplicity of implementation, the Committee recommends option C. III. Investments - Fair value adjustments through profit & loss account Issue: As per Indian Accounting Standard (Ind AS) 109, Financial Instruments, an entity shall measure its financial asset or financial liability at fair value or at amortised cost. Examples of financial asset or financial liability that are required to be recognised at fair value on each reporting date with changes in fa....