Background:
The Ministry of Corporate Affairs (MCA) vide its notification dated March 31, 2023, has notified the Companies (Indian Accounting Standards) Amendment Rules, 2023 to amend the provisions of Companies (Indian Accounting Standards) Rules, 2015. The amended provisions shall come into force
w.e.f. April 01, 2023.
Amendments:
In Appendix B, a new paragraph B14 has been inserted which states that:
Paragraphs 15 and 24 of Ind AS 12, Income Taxes exempt an entity from recognizing a deferred tax asset or liability in particular circumstances. Despite this exemption, at the date of transition to Ind ASs, a first-time adopter shall recognize a deferred tax asset, to the extent it is possible that taxable profit will be available against which the deductible temporary difference can be utilized.
Para 15:
A deferred tax liability shall be recognized for all taxable temporary differences, except to the extent that the deferred tax liability arises from: the initial recognition of an asset or liability in a transaction which at the time of the transaction, does not give rise to equal taxable and deductible temporary differences.
An entity applying Deferred Tax related to Assets and Liabilities arising from a single transaction shall also, at the beginning of the earliest comparative period presented:
• recognize a deferred tax asset to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilized.
• recognize a deferred tax liability for all deductible and taxable temporary differences associated with:
right-of-use assets and lease liabilities; and
decommissioning, restoration and similar liabilities and the corresponding amounts recognized as part of the cost of the related asset; and
• recognize the cumulative effect of initially applying the amendments as an adjustment to the opening balance of retained earnings (or other component of equity, as appropriate) at that date.
Para 13 of Appendix C states the disclosure requirements under IndAS 103. Clause (b) states that the disclosure of the date on which the transferor obtains control of the transferee shall be made. This has been substituted with “the date on which the transferee obtains control of the transferor.”
Additon to para 21 has been made which says that “Information about the measurement basis for financial instruments used in preparing the financial statements is material accounting policy information and is to be disclosed.”
Paragraph 10 which states the complete set of Financial Statements, in item (e), for the words “significant accounting policies”, the words “material accounting policy information”, shall be substituted.
Para 117 (Disclosure of Accounting Policy Information) is substituted with; “An entity shall disclose material accounting policy information. Accounting policy information is material if, when considered together with other information included in an entity’s financial statements, it can reasonably be expected to influence decisions that the primary users of general-purpose financial statements make on the basis of those financial statements.”
Para 117A to 117E is added to explain the materiality of accounting information. The crux of the provision is as follows:
• Accounting policy information that relates to immaterial transactions, other events or conditions is immaterial and need not be disclosed.
• If an entity discloses immaterial accounting policy information, such information shall not obscure material accounting policy information.
• An entity’s conclusion that accounting policy information is immaterial does not affect the related disclosure requirements set out in other Ind ASs.
(iv) Paragraphs 118, 119, 120 and 121 have been omitted.
