Difference Between ICDS & Accounting

Standards
ICDS are purely independent of Accounting Standards (AS) issued by ICAI
and accepted under Sec 129 & 133 of Companies Act.

In other words, companies are required to compute their income in TWO

WAYS one for paying dividends and one for paying income tax from the same
records & results.

Similarly, companies have to provide depreciation under schedule II of

Companies Act in one manner & method while compute depreciation
under Section 32 of IT Act in totally different manner.

In short, company is required to maintain TWO records of same financial

year and there is always a need of reconciliation between the two in case of
verification.

Since ITDS are like accounting standards for all tax payers having business
income and tax audit u/s 44AB, Accounting Standards of ICAI may be
recognized in Sec 145 of IT Act to replace n compensate the objectives of
ICDS.

Similarly, depreciation provided under Companies Act should be recognized

under IT Act Sec 32 also for companies & firms having business income.

This will not only reduce redundant computation but also make tax returns
compatible with books of accounts of tax payers maintained under mercantile
system of accounting.

Compliance of accounting standards will bring in uniformity even for non-

corporate tax payers as tax can only be deferred not avoided in business &
profession. Moreover, in case of companies, provisions of MAT can be
removed.

Advance Tax, Interest & Penalty provisions will get streamlined and more
stringent since there will be low scope of variance between book profit &
taxable profit. Assessment work will become easy and assessee will have
lesser opportunity of going in appeals also.

ICDS Applicability for May 2017 CA IPCC & CA Final Exams

ICAI has already mentioned that, ICDS will be applicable for the upcoming
May 2017 CA IPCC and CA Final Exams.

Conclusion

The purpose of ICDS is basically to bring uniformity among calculation of

dividend tax across different companies and industries.