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The Finance Ministry, in May, issued a fresh draft of the Income Computation and Disclosure Standard (ICDS) for real estate transactions, which could lead to a higher tax incidence on real estate projects. With the Real Estate (Regulation and Development) Act, 2016 (RERA) coming into effect from May 1, the draft norms propose to do away with the condition of obtaining all 鈥榗ritical approvals鈥� for revenue recognition. The norms states that since the recognition of revenue under other conditions is deferred up to incurrence of 25 per cent of the construction and development cost (which does not include land cost), the condition of obtaining critical approval is not found by the Committee to be very relevant. Also, the proposed norms do not provide for capping the recognition of revenue based on the stage of completion determined with reference to the project cost incurred. The fresh draft is based on the guidance note issued on real estate transactions by the Institute of Chartered Accountants of India last year that was reviewed by a government committee. In all, it has proposed changes in five areas, including the definition of project and project cost, revenue recognition, application of percentage of completion method (POCM) for real estate projects and transferable development rights. The Central Board of Direct Taxes (CBDT) then sought comments from stakeholders by May 26, after which the norms will be finalised. The draft has also proposed to define the project as a set of units which are connected by basic facilities and not the earlier proposed common amenities. As per reports, the norms could offer more clarity to taxation of computable income in real estate but could also have a higher tax impact.