MCA Exempts Government Companies from Complying with Ind-AS 12

February 07, 2018

Ministry of Corporate Affairs (MCA) has exempted the Government Companies which are notified as Public Financial Institution under the Companies Act and registered as NBFC (Non-Banking Financial Companies) with the Reserve Bank and engaged in the business of Infrastructure Finance Leasing with not less than seventy five per cent of its total revenue being derived from such business with Government Companies owned or controlled by the Government from the provisions of Accounting Standard-22 (AS-22) / Indian Accounting Standard-12 (Ind-AS 12) for a period of seven years.

AS-22 and Ind-AS 12 mandates the recognition of provision for Deferred Tax in the Financial Statements of the Companies for the timing difference in the accounting income and taxable income for items such as different in the depreciation rates as per Income Tax Act and Companies Act.

The exemption is expected to largely benefit Indian Railway Finance Corporation (IRFC) which is the dedicated market borrowing arm of the Ministry of Railways meeting predominant portion of the Extra Budgetary Resources (EBR) requirements through financial leasing model. A press release issued by the Ministry of Railways states that the decision will enable IRFC to raise additional debt to the extent of over Rs. 63,000 crore

 

 

About the Author

Shilpi Sharan

- Shilpi Sharan is the Editor at Vakilno1.com - an Advocate with extensive knowledge in myriad fields of Law. She has a flair of writing and has legal publications in national and international law magazines to her credit. She focuses on legal research and aims at raising public awareness of laws in India.