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01 February, 2018

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Budget 2018 - MTM Losses Allowable Only as per ICDS


MTM Losses Allowed as Deduction under Income Tax Only if Computed as per ICDS Prescribed

By CA Ankit Gulgulia (Jain)

Section 36(1) of Income Tax Act, 1961 will have a latest insertion of Clause (xvii) and shall be deemed to have been inserted with effect from the 1st day of April, 2017, namely:-
"(xviit) marked to market loss or other expected loss as computed in accordance with the income 20 computation and disclosure standards notified under sub-section (2) of section 145.''.

Further, In section 40A of the Income-tax Act, after sub-section (12) the following sub-section shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 2017, namely:-

"( 13) No deduction or allowance shall be allowed in respect of any marked to market loss or other 25 expected loss, except as allowable under clause[a1]  (xviii) of sub-section ( 1) of section 36.''.

Clearly, MTM Losses and other Expected Losses will no more be allowed as per Books of Assessee. The same can be allowed as deduction only if computed in accordance with ICDS. More Power to ICDS !



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