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Clarification by SEBI regarding Revenue recognition and Excise Duty Restrictions




Transition to Indian Accounting Standards (Ind AS) has brought a set of challenges for companies as well as the regulators. SEBI vide its circular dated 5 July 2016 (CIR/CFD/FAC/62/2016) requires listed companies to comply with the formats prescribed under the SEBI Circular dated 30 November 2015, for reporting financial results till 31 December 2016. The 31 March 2017 financial results onwards are required in the formats prescribed in Revised Schedule III of the Companies Act 2013.

The format prescribed by SEBI permits ‘Income from Operations’ to be disclosed net of excise duty. However, Schedule III of the Companies Act, 2013 (2013 Act) notified on 6 April 2016, requires ‘Revenue from Operations’ to be disclosed inclusive of excise duty.

The Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) issued a notification on behalf of SEBI, on 20 September 2016, which clarifies that companies should follow a uniform approach in their revenue disclosures. Accordingly, ‘Income from Operations’ may be disclosed inclusive of excise duty, instead of net of excise duty, as specified in the 2013 Act.

This clarification is based on the guidance in the SEBI circular(CIR/CFD/FAC/62/2016) dated 5 July 2016, which stated that ‘in case of any technical difficulty in the interpretation of any specific item in the formats or implementation of this circular while publishing the financial results, the listed entities shall be guided by the relevant provisions of the Companies (Indian Accounting Standards) Rules, 2015 (Ind AS Rules)/Companies (Accounting Standards) Rules, 2006 (AS Rules) and Schedule III to the 2013 Act and may make suitable modifications, as applicable’.

The clarification is also consistent with the view proposed by the Ind AS Transition Facilitation Group (ITFG) of the Institute of Chartered Accountants of India (ICAI) in its 4th bulletin. The ITFG -4, based on guidance in Ind AS 18- Revenue and Schedule III of the 2013 Act, considered excise duty to be a liability of the manufacturer, which forms part of the cost of production. Accordingly, revenue should be presented as a gross amount inclusive of excise duty, which should therefore be reflected as an expense.


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  1. UnknownNov 1, 2016, 2:58:00 PM

    I read each line of article, well informed about SEBI. Looking for more useful post and really appreciate for this wonderful work. Can you provide MCX HNI Tips service.

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