Ind AS 20 Accounting treatment of SEIS benefit received from government on export of service
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- Last Updated on 8 September, 2021
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As per Ind AS 20 Accounting for Government Grants and Disclosure of Government Assistance, Grant means those financial assistance provided by government on fulfillment of condition specified on it. It may be either in monetary terms or in non-monetary terms. For the presentation of these governments’ grants, we have three options as prescribed in relevant standard either show these grants separately or show it, under the heading of ‘other income’ or deduct it directly from related expense. The management have freedom to choose any option for presentation of government grants. The standard also states that grants can be recognized only when, it is certain that the company should fulfill the conditions, specified on it and should receive the grant, otherwise it is recognized as and when it received.
Further, it is not necessary that an incentive received in the form of government grant on export of service, is to be recognized as ‘other income’. The decision of whether a particular income should be disclosed as ‘other income’ or ‘other operating revenue’, is based on the facts of the case and detailed understanding of the company’s activities.
In a similar scenario as mentioned above, B Ltd. has recognized the benefit from Services Export from India Schemes (SEIS) – an incentive by Government of India as ‘Other Operating Revenue’ under the head Revenue from Operations. Whether it can be said that the accounting treatment adopted by B Ltd. in respect of benefit received on export of service is correct as per relevant Ind AS?
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