Ind AS, Financial Statements, GST Returns & TDS

Ind AS moves beyond historical cost alone. Two areas appear constantly in practice:

Fair value — the price received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Used heavily in Ind AS 109 (financial instruments), Ind AS 103 (business combinations), and impairment testing under Ind AS 36.

Ind AS 115 (Revenue from Contracts with Customers) — revenue is recognised when (or as) the entity satisfies performance obligations by transferring promised goods or services. The five-step model:

1. Identify the contract with the customer.
2. Identify separate performance obligations.
3. Determine the transaction price.
4. Allocate the price to each obligation.
5. Recognise revenue when each obligation is satisfied.

Simple example — SaaS company sells a 12-month subscription (₹1,20,000) with setup (₹30,000). Setup is a distinct obligation satisfied upfront; subscription is satisfied over 12 months.

Month	Revenue recognised (₹)
Month 1	30,000 + 10,000 = 40,000
Month 2–12	10,000 each

Under older AS 9, timing could differ. Ind AS 115 focuses on transfer of control, not merely billing or cash receipt.

Ind AS-compliant entities publish three primary statements (plus notes):

Statement of Profit and Loss — shows income, expenses, and profit for the period. Key lines: revenue, cost of materials consumed, employee benefits, depreciation, finance costs, tax, PAT.

Balance Sheet (Statement of Financial Position) — assets, liabilities, and equity at period-end. Current vs non-current classification follows Ind AS 1 (generally 12-month operating cycle test).

Cash Flow Statement (Ind AS 7) — reconciles net profit to cash movement via:

Activity	Examples
Operating	Collections from customers, supplier payments
Investing	Purchase/sale of PPE, investments
Financing	Loan proceeds, dividend paid, equity issue

Mini P&L excerpt (₹ lakhs):

Particulars	Amount
Revenue	500
Cost of goods sold	(300)
Gross profit	200
Operating expenses	(120)
EBITDA	80
Depreciation	(15)
Interest & tax	(20)
PAT	45

Notes and disclosures (accounting policies, related parties, contingencies) are integral — the statements alone are incomplete.

Registered businesses file periodic GST returns (forms and frequencies evolve — verify current rules on the GST portal). Core concepts:

Outward supplies — sales/services you provide; tax collected from customers. Inward supplies — purchases; tax you pay, potentially claimable as Input Tax Credit (ITC).

Typical monthly compliance flow (simplified):

1. Record all invoices in books with correct HSN/SAC and GST break-up.
2. File GSTR-1 (or IFF) — outward supply details.
3. File GSTR-3B — summary return with tax payment (liability minus eligible ITC).
4. Reconcile with GSTR-2B (auto-drafted ITC statement) — match vendor invoices.

ITC eligibility — generally requires: valid tax invoice, goods/services used for business, supplier has filed returns, not blocked under Section 17(5) (e.g., certain motor vehicles, personal consumption).

Ledger reconciliation example:

Item	₹
Output GST collected	1,80,000
Less: Eligible ITC	(1,20,000)
Net GST payable	60,000

Mismatch between books and GSTR-2B is a common audit finding — reconcile monthly, not at year-end.

Tax Deducted at Source (TDS) — when paying certain incomes (salary, professional fees, rent, interest, etc.), the payer deducts tax at prescribed rates and remits it to the government. The payee receives net amount and a TDS certificate (Form 16/16A) as proof.

Example — company pays consultant fee ₹1,00,000; TDS u/s 194J at 10%:

Particulars	₹
Gross fee	1,00,000
TDS deducted	(10,000)
Net paid	90,000

Company books: Debit Professional Fees ₹1,00,000; Credit TDS Payable ₹10,000; Credit Bank ₹90,000.

Companies Act 2013 — Section 128 (Books of Account): every company must keep books at registered office showing all money received/spent, assets and liabilities, and items of cost. Books must be kept on accrual basis and according to double-entry system. Financial year in India: 1 April to 31 March.

Retention: books and vouchers must be preserved for eight years (extend if investigation pending). Section 134 requires directors to ensure adequate internal financial controls.

Practical tip: chart of accounts should map to both Ind AS note disclosures and tax schedules (GST, TDS, income tax) to avoid parallel shadow books.