The ghost of MAT (minimum alternative tax) has reemerged as tax simplification committee, headed by justice Easwar, wants to hold new accounting standard rules sighting adverse and uncertain impact on MAT. But the government body, which has shaped new accounting norms, has refuted this apprehension of Easwar Committee. Tax Simplification Committee is going to submit its final report to finance minister on Sunday (31st January 2016). dna has seen the final version of this report which suggests to hold new accounting system for certain period to evaluate its impact on MAT.
New accounting norms will change the rule of game of profit counting. Book profit to income figures of businesses will be changed. IND-AS (Indian version of International financial reporting standards) are being implemented with effect from previous year starting on first April 2015. From April 1st 2016 Ind-AS will be mandatorily applicable for certain businesses.
The committee suggested to government that it could have adverse impact on MAT. Tax committee said in final report that Ind-AS will hit companies' book profit as well as income figures. Committee has suggested that "till such time the taxation department as well as assessee are able to understand the real impact on taxable income and book profit". MAT is a minimum tax-based on book profit.
But the body, which has finalised the Ind-AS norms, has rejected this nervousness. Chairmen of National Advisory Committee on Accounting Standards (NACAS), who is behind the Ind-AS norms, Amarjit Chopra said to dna "the mandate to Eswaran committee was to look at simplification of existing income tax laws. For the purpose of studying the impact of Ind-AS on various aspect of tax laws, a group has already been constituted including past president of ICAI Kamlesh Shivji Vikamsey. It is my earnest desire that the group submits its report at the earliest".
Government of India has constituted a 10-member committee under the chairmanship of justice R V Easwar to 'study and identify the provision and phrases in income tax' which create litigation on account of interpretative differences. The committee has one-year tenure. On 31st January 2016, the first set of recommendations is submitted to Finance minister Arun Jaitly in New Delhi. Government has been indicated that relevant part of Easwar committee report will be included in upcoming budget.
What is IND-AS?
Currently, the Institute of Chartered Accountants of India (ICAI) has issued 39 Indian Accounting Standards (Ind-AS) which have been notified under the Companies (Indian Accounting Standards) Rules, 2015 ("Ind AS Rules"), of the Companies Act, 2013. Whenever a company gets covered under the proposed roadmap, Ind-AS becomes mandatory, its holding, subsidiary, associate and joint venture companies will also have to adopt Ind-AS.
On 16 February 2015, Ministry of Corporate Affairs (MCA) has issued the roadmap for Ind-AS implementation. Highlights are as follows:
2016-17 - Companies (listed + unlisted) whose net worth is equal to or greater than Rs 500 crore
2017-18 -Unlisted companies whose net worth is equal to or greater than Rs 250 crore and all listed companies
2018-19 onwards - When a company's net worth becomes greater than Rs 250 crore
2015-16 or later - Entities, not under the mandatory road- map, may later voluntarily adopt Ind AS
2018-19 or later -Banks, NHB, SIDBI will follow Ind-AS
Fine print of Easwar COMEETE'S FINAL REPORT
Raise the threshold limits and reduction of the rate of TDS from 10% to 5%
Surplus up to Rs 5 lac income should count as long term capital gain (tax free).
Higher interest in case of delayed Tax refund
No interest be disallowed if source of investment is directly relatable to taxable income
Eliminate taxation of the purchaser of the property on the amount of differences between the sale price and the stamp duty value
Reduce the time limit for rectification of orders of the tribunal from the present four years to 120 days
Release the property attached (section 281 B) on submission of bank guarantee
Presumptive income scheme for professionals
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