Announcement
Revision in the criteria for Classifying Level II
Non-Corporate Entities
1. The Council
of the Institute with a view to harmonise the differences between the Accounting
Standards issued by the ICAI and the Accounting Standards notified by the
Central Government under the Companies (Accounting Standards) Rules, 2006, in
February, 2008 issued the announcement titled as ‘Harmonisation of
various differences between the Accounting Standards issued by the ICAI and the
Accounting Standards notified by the Central Government’* wherein
the Council prescribed the criteria for classifying the non-corporate entities
in to Level I, Level II and Level III. As per the announcement Level II
entities are:-
2. Non-corporate
entities which are not Level I entities but fall in any one or more of the following
categories are classified as Level II entities:
(i) All commercial, industrial and
business reporting entities, whose turnover (excluding other income) exceeds
rupees forty lakh but does not exceed rupees fifty crore in the immediately
preceding accounting year.
(ii) All commercial, industrial and
business reporting entities having borrowings (including public deposits) in
excess of rupees one crore but not in excess of rupees ten crore at any time
during the immediately preceding accounting year.
(iii) Holding and subsidiary entities of
any one of the above.
3. The
Council of the Institute at its 321st meeting held on January 10-12, 2013 at
New Delhi, considering recent changes in the enhancement of tax audit limit,
decided to change the applicability of Accounting Standards for Level II
entities from Rs. 40 lakhs to Rs. 1 Crore with effect from the accounting
year commencing on or after April 01, 2012.
4. Accordingly,
from the accounting year commencing on or after April 1st, 2012, criteria
for classification of Level II entities is as follows:-
Level II
Entities (SMEs)
Non-corporate
entities which are not Level I entities but fall in any one or more of the following
categories are classified as Level II entities:
(i) All commercial, industrial and
business reporting entities, whose turnover (excluding other income) exceeds
rupees one crore but does not exceed rupees fifty crore in the immediately
preceding accounting year.
(ii) All commercial, industrial and
business reporting entities having borrowings (including public deposits) in
excess of rupees one crore but not in excess of rupees ten crore at any time
during the immediately preceding accounting year.
(iii) Holding
and subsidiary entities of any one of the above.
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* Published in ‘The Chartered Accountant’, February 2008 (pp.
1340)
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