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India GAAP

Version 7 - November 2024 (CUD release)

  • Financial period: 12 months (annual)
  • Target Industry: Manufacturing, Services, and Generic (excluding Financial Services)

Content update

This CUD release focuses on the legislative content changes for the period ending March 2025.

Legislative updates

The Hon’ble Supreme Court of India, in its judgment dated 15 February 2024, has declared certain amendments to section 182 of the Companies Act, 2013, made through the Finance Act, 2017, as unconstitutional. This decision impacts how companies need to disclose political contributions in their financial statements. Here is a summary of the implications:
Section 182 of CA 2013
Particular
Pre-amendment by FA 2017
Post-amendment by FA 2017
Limits on political contribution (Section 182(1) First Proviso of CA 2013)
Political contributions couldn’t be more than 7.5% of the average net profits from the last 3 years.
The FA 2017 removed this limit, allowing companies to contribute any amount to political parties.
Disclosure in financial statements (Section 182(3) of CA 2013)
Every company shall disclose in its profit and loss account
any amount or amounts
contributed by it to any political party during the financial year to which that account relates,
giving particulars of the total amount contributed and the name of the party to which such amount has been
contributed
.
The FA 2017 changed this rule, so companies only needed to report the total amount given to all political parties, without naming them.
The Supreme Court declared the amendments in section 182 unconstitutional, so the original requirements from the pre-amended section 182 of CA 2013 will now apply retroactively.
Minimum disclosure requirements for the current year and prior year in standalone financial statements (SFS) and consolidated financial statements (CFS) include:
  • Companies must provide the name of each political party, the amount given to each party, and the total amount for both the current year and the previous period, assuming only 2 years' accounts are presented.
  • If a company exceeded the 7.5% limit in the current or any earlier years, they'll need to disclose the total amount contributed, the percentage of average net profit, the amount paid beyond the 7.5% of the average net profit for the relevant preceding 3 years, the financial year to which this applies, and any possible implications.
There are no early adoptions for these accounting standards.

This article applies to:

  • Product: ONESOURCE Statutory Reporting
  • Subject: Templates

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