Updated | May 14, 2017 18:15 IST
Post RERA(Real Estate Regulation Act), a lot of reforms expected to come in the real estate sector for the benefits of both home buyers as well as developers. Now, on real estate transactions for public consultation, the Central Board of Direct Taxes(CBDT) has released a draft Income Computation and Disclosure Standard(ICDS) on Thursday.
After the RERA came into effect, the draft ICDS doesn’t decree getting all critical approvals for revenue recognition. As per the guidance note formulated by the ICAI, Institute of Chartered Accountants of India, it also suggests recognition of transferable development rights(TDR) at the fair value against fair market value or net book value.
Taxmann.com, director, Rakesh Bhargava said,” The transactions include development and sale of residential and commercial units, independent houses, row houses, with or without an undivided share in land and sale of plots of land with or without any development including long-term sale-type leases. Besides, utilisation, acquisition, and transfer of development rights, redevelopment of existing structures and buildings and joint development agreements will also be included.
As mentioned above, the draft is issued by ICAI with certain modifications as proposed by the governments by ICDS committee. The suggested ICDS put an end with the ceiling for revenue recognition based on the stage of completion governed with reference to the project cost incurred.
Based on guidance note, the draft ICDS has made changes in some areas such as the definition of project and project cost, application of percentage of completion method(POCM) for real estate projects, revenue recognition, and transferable development rights(TDRs).
Partner and Leader of direct tax at PwC, Abhishek Goenka said,” Most of the deviations from the guidance note issued by the ICAI will have the effect of accelerating revenue recognition for tax purposes. Specifically, the change requiring recording TDRs at fair value will create tax incidence on unrealised revenues.
Jul 23 2018
Feb 1 2018
Feb 1 2018
Jan 31 2018
Jan 30 2018
Jan 30 2018
© 2017 TollyBeats Media Pvt. Ltd. All Rights Reserved.