Sandeep Ahuja & Co.

Established in the year 1986, we are a leading chartered accountancy firm based in Delhi & NCR rendering comprehensive professional services which include statutory audit, internal audit, direct tax, transfer pricing, GST, bank audit, propriety audit, cost accounting, internal financial controls and risk advisory.

Friday, July 14, 2017

ICDS 7 vs. AS 12

The corresponding AS to ICDS - 7 'Government Grants' is AS - 12 'Government Grants'

Point of Difference

AS - 12
ICDS - 7
Recognition of Grant

Mere receipt is not sufficient.
Recognition cannot be postponed beyond date of actual receipt.
Grants other than those covered by specific provisions
Revenue grant recognised a income or reduced from related expenses

Doesnt clarify whether it is restricted to revenue grants
Relatable to depreciable fixed assets

Reduction from fixed assets OR Recognised as deferred revenue by systematic credit to P&L Reduced from fixed assets
Relatable to non depreciable fixed assets

No conditions - credited as capital reserve
Conditions attatched - credited to P&L over period of incurring cost of meeting condition of grant
No conditions - Treated as income
Conditions attached - income over period over which cost of meeting conditions is incurred
Grant in the nature of promoters contribution
Credited to Capital Reserve.
Treated as shareholders fund.
No clarity
(recognisable as income)
Disclosure requirement No disclosure for unrecognised grants
Disclosure for unrecognised grants

1 comment:

  1. Dear Sir,

    One of our client is getting Subsidy under Package Scheme of Incentive, 2007 of Govt of Maharashtra.
    1) Initially client got the mega status for fullfiling the criteria of no. of employees upto 250
    2) and After 2 years , they've also filfilled Investment criteria of RS 100 cr..

    Further facts

    1) Investment made by the client is to be reimbursed byt the govt as subsidy over next 7 years subject to ceiling limit of tax collected by state govt.
    2) Every year client submits a claim and receives the subsidy amount as per funds availability with govt.

    1) what type/nature of grant is this ?

    2) what should be treatment for this kind of subsidy received under accounting standard AS 12 ? ( as we don't have clarity on nature of grant)

    3) Treatment as per ICDS 7 under Income Tax Act ?