ITFG explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Deferred tax judgements, the line between capital spares and inventory, and the capitalisation of fees and finance costs are among the most-asked fixed asset questions under Ind AS. This digest restates ITFG's answers in our own words and checks the paragraph each relies on against the current text.
ITFG clarifications are the views of ICAI's Ind AS Technical Facilitation Group as on the date of each bulletin; they are not standards. ITFG says that a spare part is property, plant and equipment if it meets the definition and the recognition test, otherwise inventory; that spending on assets the entity does not own may be capitalised as part of the cost of the main asset; that revaluation applies class by class; that processing fees are part of the effective interest rate and capitalise only as amortised during construction; and that deferred tax follows the carrying amount against the tax base and the expected manner of recovery. Tax rules are not restated here; see our income-tax guides.
Ind AS as on 1 April 2025 (ICAI Compendium of Ind AS 2025-26, the standards notified under the Companies (Indian Accounting Standards) Rules, 2015). Amendments notified after 1 April 2025 are not reflected in this article and should be checked on mca.gov.in. Getting fixed asset registers and tax workings right is a core part of books of accounts compliance for an Ind AS company.
How to read the table
Each issue is cited by bulletin and issue as printed at the end of the answer; the compendium numbers them differently. The last column says whether the paragraph relied on reads the same today. See our guides to deferred tax under Ind AS 12, property, plant and equipment under Ind AS 16, borrowing costs under Ind AS 23 and the outline of Ind AS 16.
Digest: Ind AS 12
| Situation | ITFG's view | Reference | Paragraph relied on; still the same? |
|---|---|---|---|
| Temporary differences that reverse during a tax holiday | Apply the Ind AS 12 principles; deferred tax is not recognised to the extent the reversal falls in the holiday and the income is relieved | ITFG Clarification Bulletin 11, Issue 2 | Ind AS 12, paragraphs 26-29, 47: reads the same |
| Tax-deductible goodwill from a group amalgamation that disappears on consolidation | The tax base exists, so a deferred tax asset arises in the consolidated statements if profits will be available; no initial recognition exemption | Bulletin 10, Issue 3 | Paragraphs 5, 7, 9, 11, 24: reads the same, with an extra condition added to the exemption in 2023 |
| Land the company expects to sell as part of a business, not alone | Deferred tax follows the expected manner of recovery; if recovery is through that route and tax base equals carrying amount, no temporary difference | Bulletin 7, Issue 7 | Paragraphs 5, 15, 24, 51, 51B: reads the same on the point relied on |
| Exchange differences capitalised under the old option and not deductible for tax | Not an initial recognition case, so deferred tax is recognised | Bulletin 8, Issue 8 | Paragraphs 15, 24; Ind AS 21, paragraph 7AA: reads the same on the point relied on |
| Interest and penalties on income tax | Not part of current tax; interest is a finance cost and other penalties are other expenses, unless the amount is based on taxable profit | Bulletin 16, Issue 2 | Ind AS 12, definitions; Ind AS 1, paragraph 29: reads the same |
| Land converted from capital asset to stock-in-trade | Deferred tax arises only if the carrying amount differs from the tax base; recognition test as usual; tax rules for the conversion are for the income-tax guides | Bulletin 17, Issue 7 | Paragraphs 5, 15, 24, 51: reads the same on the point relied on |
| A change in tax law during the year offering a lower rate by election | Measure at enacted or substantively enacted rates the company expects to apply; use the lower rate only if the company expects to elect it, and only for periods in which it will apply | Bulletin 23, Issue 1 | Paragraphs 46-47: reads the same (paragraph 46 is about current tax, paragraph 47 about deferred tax) |
Digest: Ind AS 16, 23 and 38
| Situation | ITFG's view | Reference | Paragraph relied on; still the same? |
|---|---|---|---|
| Railway siding, road and bridge the entity pays for but does not own | Capitalise as part of the cost of the main project if directly attributable; depreciate over the main asset's life or less; present with that class | Bulletin 11, Issue 8 | Ind AS 16, paragraphs 7, 9, 16, 43, 45: reads the same |
| A road on land the company does not own | Capitalise only if necessary to make the item capable of operating as intended | Bulletin 2, Issue 5 | Paragraph 16(b): reads the same |
| Revaluation model for land and buildings and for some classes only | Check investment property first (cost only); within PPE, revalue a whole class, and classes may differ | Bulletin 12, Issue 1 | Paragraphs 29, 31, 36-37; Ind AS 40, paragraph 30: reads the same |
| An item capitalised under old rules that is not an asset, with deemed cost used | Deemed cost cannot cover it; treat as an error and show it in the reconciliations | Bulletin 8, Issue 4 | Ind AS 101, D7AA, 24, 26: reads the same |
| Capital spares held as inventory under old GAAP, deemed cost used | Recognise them as PPE if they meet the definition, in addition to the carried-forward amount; measure under Ind AS 16 and depreciate from availability | Bulletin 3, Issue 9; Bulletin 5, Issue 6 | Ind AS 16, paragraphs 6-8, 50, 55; Ind AS 101, paragraph 10: reads the same |
| An 'insurance spare' used with equipment | PPE if it meets the tests, separately from the equipment; depreciation can start on purchase | Bulletin 2, Issue 4 | Paragraphs 7-8, 55: reads the same |
| 'More than one period' in the PPE definition | Ordinarily the annual period | Bulletin 5, Issue 6 | Paragraph 6: reads the same |
| Revaluation surplus on transition, with Ind AS 16 applied retrospectively or deemed cost taken | Opening surplus moves to retained earnings or another equity category where deemed cost is used; later increases go to other comprehensive income | Bulletin 14, Issue 6 | Ind AS 16, paragraph 39; Ind AS 101, paragraph 11: reads the same |
| Processing fee on a loan for a qualifying asset | Fee is part of the effective interest rate; capitalise only the part amortised up to the end of the capitalisation period | Bulletin 14, Issue 1 | Ind AS 23, paragraph 6; Ind AS 109, B5.4.1-B5.4.2: reads the same |
| Construction in progress acquired in a business combination | The acquirer uses its own allocated amount and date as the expenditure; in group accounts the group's view applies; a parent's separate investment is a financial asset and cannot be a qualifying asset | Bulletin 19, Issue 4 | Ind AS 23, paragraphs 5, 7, 8: reads the same |
| Toll road concession entered after Ind AS applies | The transition relief is only for assets recognised before the first Ind AS period; Ind AS 38 principles apply to later concessions | Bulletin 3, Issue 13 | Ind AS 38, paragraph 7AA; Ind AS 101, D22: reads the same (D22 now refers to Ind AS 115) |
Issues left out
Compendium issue 81, on a tax on dividends that was later withdrawn, and issue 111, on the same subject within borrowing costs, are left out; see our income-tax guides. Issue 89, which recomputes depreciation against rates fixed by an earlier Act's schedule, is left out because it turns on that schedule rather than on the Ind AS text.
Three answers explained
Spare parts (Bulletins 2, 3 and 5). Paragraph 8 of Ind AS 16 sends spare parts and stand-by equipment to PPE when they meet the definition in paragraph 6, and to inventory otherwise. Under deemed cost, ITFG separates the carried-forward PPE amount from items that were never in PPE: paragraph 10 of Ind AS 101 requires recognition of items Ind AS treats as assets, so capital spares are brought in on top.
Assets you do not own (Bulletin 11, Issue 8). Paragraph 16 lets directly attributable costs of getting the asset ready go into its cost. ITFG applies this to enabling infrastructure the entity cannot control, as part of the cost of the refinery rather than as a separate asset.
Fees and borrowing costs (Bulletin 14, Issue 1). Because fees integral to the effective interest rate are within borrowing costs (paragraph 6), only the amortised portion up to the end of capitalisation is capitalised, not the whole fee.
What a finance team should take from this
- Run each spare against the PPE definition and recognition test at purchase, not at consumption.
- Keep a deferred tax file showing the carrying amount, tax base and expected manner of recovery per item.
- Compute borrowing cost capitalisation from the effective interest rate, including fees.
Need help with fixed assets and deferred tax?
If a fixed asset register, component split or deferred tax working needs rebuilding for Ind AS, our team can do it with the supporting schedules as part of books of accounts compliance.
Key takeaways
- Spares are PPE or inventory by the Ind AS 16 tests; deemed cost does not keep them out of PPE.
- Costs of enabling assets you do not own can form part of the main asset's cost.
- Revaluation is by class; investment property is cost only.
- Processing fees capitalise only as amortised during construction.
Read next
- Deferred tax under Ind AS 12
- Property, plant and equipment under Ind AS 16
- Borrowing costs under Ind AS 23
- Ind AS 16: property, plant and equipment
Disclaimer: Based on the Indian Accounting Standards as on 1 April 2025 (ICAI Compendium of Ind AS 2025-26, the standards notified under the Companies (Indian Accounting Standards) Rules, 2015) and, where named, the ITFG clarification bulletins of ICAI, as consulted on 4 October 2026. Amendments notified after 1 April 2025 should be checked on mca.gov.in. This article is general information, not legal advice; check the official text before acting.