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What Ind AS 115 actually says.
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115
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"The deferred revenue liability created by Ind AS 115 is not a burden on the balance sheet — it is a timing mechanism that, when used deliberately, lowers the effective tax rate for the period of deployment."— Representative Industry View, 2025
The five-step model, applied to airlines.
- Step 1: Identify the contract — the seat sold, ancillary bundled, or programme enrolled.
- Step 2: Identify performance obligations — carriage, ancillary delivery, loyalty earn.
- Step 3: Determine transaction price — net of variable consideration and loyalty deferral.
- Step 4: Allocate the price — standalone selling price method for bundled services.
- Step 5: Recognise revenue as obligations are satisfied — at departure, not at sale.
The timing advantage.
| Event | Cash Received | Revenue Recognised | Tax Point |
|---|---|---|---|
| Advance Sale (T-60) | Yes | No | Deferred |
| Departure (T-0) | No | Yes | Triggered |
| Ancillary Redemption | No | Yes | Triggered |
| Breakage Estimate | No | Partial | Partial |
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"A capital programme that is structured to interact with the deferred revenue liability is not aggressive tax planning. It is accounting literacy."
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