IND - AS
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Ind-AS Overview
While the Accounting Standards were regulating the accounting scenario in India, there was a necessity to align the accounting principles and provisions with international standards. This led to the introduction of Indian Accounting Standards, commonly known as Ind-AS. So, what are Ind-AS, how do they replace existing accounting standards, and what is their scope? Here’s a comprehensive guide to Ind-AS.
What Are Ind-AS?
Ind-AS are the Indian equivalents of International Financial Reporting Standards (IFRS), the globally recognized accounting standards issued by the IFRS Foundation and International Accounting Standards Board. Ind-AS aligns the provisions of IFRS with the specific requirements of the Indian economy, ensuring that Indian entities follow accounting principles consistent with global standards.
Phases for Implementation of Ind-AS
Ind-AS was implemented in India in a phased manner. Here are the phases for its implementation:
For Companies
Phase-I:
- From April 1, 2015: Ind-AS adoption was permitted voluntarily for all companies, along with comparative financial statements.
- From April 1, 2016: Ind-AS became mandatory for the following companies:
- All companies (listed, unlisted, or in the process of listing on Indian or foreign stock exchanges) with a net worth of Rs. 500 crore or more.
- Every holding, subsidiary, joint venture, and associate company of the above entities.
Phase-II:
- From April 1, 2017: Ind-AS became mandatory for the following companies:
- All companies listed or in the process of listing on stock exchanges within or outside India, not covered in Phase-I.
- Unlisted companies with a net worth between Rs. 250 crore and Rs. 500 crore.
- Every holding, subsidiary, joint venture, and associate company of the above entities.
Points to Note:
- Companies meeting the thresholds at the end of any accounting year must subsequently apply Ind-AS from the immediate next accounting year.
- Ind-AS compliance is not mandatory for companies listed on the SME exchange.
- Once adopted, Ind-AS must be followed for all subsequent financial years, even if the criteria for mandatory adoption cease to apply later.
- Ind-AS applies to both standalone and consolidated financial statements.
For Scheduled Commercial Banks, NBFCs, Insurers, and Insurance Companies
Non-Banking Financial Companies (NBFCs)
Phase-I:
- From April 1, 2018: Ind-AS became mandatory for the following companies:
- Listed or unlisted NBFCs with a net worth of Rs. 500 crore or more.
- Every holding, subsidiary, joint venture, and associate company of the above entities not covered under corporate roadmap Part A.
Phase-II:
- From April 1, 2019: Ind-AS became mandatory for the following companies:
- NBFCs with a net worth less than Rs. 500 crore, whose equity or debt securities are listed or in the process of listing on any stock exchange within or outside India.
- Unlisted NBFCs with a net worth between Rs. 250 crore and Rs. 500 crore.
- Every holding, subsidiary, joint venture, and associate company of the above entities not covered under corporate roadmap Part A.
Points to Note:
- NBFCs with a net worth below Rs. 250 crore are not required to adopt Ind-AS voluntarily.
- Ind-AS applies to both standalone and consolidated financial statements.
Scheduled Commercial Banks (Excluding RRBs)
Initially, the implementation of Ind-AS for Scheduled Commercial Banks (excluding Regional Rural Banks) was scheduled for April 1, 2018, but it was deferred to April 1, 2019, and subsequently deferred until further notice through notifications.
Insurer and Insurance Companies
The implementation of Ind-AS for the insurance sector has been deferred by the Insurance Regulatory and Development Authority of India (IRDAI) until further notice.
Applicable Division in Schedule-III of the Companies Act, 2013
The Ministry of Corporate Affairs has amended Schedule-III of the Companies Act, 2013, introducing Division-II and Division-III:
- Division-I: Applicable to companies preparing financial statements under Accounting Standards.
- Division-II: Applicable to companies preparing financial statements under Ind-AS.
- Division-III: Applicable to NBFCs preparing financial statements under Ind-AS.
Points to Note:
Companies preparing financial statements under other specific acts (e.g., electricity companies, insurance companies) are exempt from the above requirements. However, companies in the electricity generation and supply sector can follow Schedule-III of the Companies Act, 2013, until a different format is prescribed under the Electricity Act, 2013, or other relevant statutes. According to Section 1(4) of the Companies Act, 2013, these provisions apply to such companies to the extent they are not inconsistent with the provisions of the Electricity Act.
All companies subject to the Companies (Indian Accounting Standards) Rules, 2015, should refer to Division-II and the Guidance Note on Division-II for preparing their financial statements.
FAQs
IFRS serves as the basis for drafting Ind-AS. However, to align it with the Indian economy, certain modifications were made. Carve-Ins refer to additions in Ind-AS compared to IFRS/IAS, while Carve-Outs are items present in IFRS/IAS but omitted in Ind-AS.
The following is the list of all Ind-AS:
Ind AS 101 First-time adoption of Ind AS
Ind AS 102 Share-Based Payment
Ind AS 103 Business Combination
Ind AS 104 Insurance Contracts
Ind AS 105 Non-Current Assets Held for Sale and Discontinued Operations
Ind AS 106 Exploration for and Evaluation of Mineral Resources
Ind AS 107 Financial Instruments: Disclosures
Ind AS 108 Operating Segments
Ind AS 109 Financial Instruments
Ind AS 110 Consolidated Financial Statements
Ind AS 111 Joint Arrangements
Ind AS 112 Disclosure of Interests in Other Entities
Ind AS 113 Fair Value Measurement
Ind AS 114 Regulatory Deferral Accounts
Ind AS 115 Revenue from Contracts with Customers
Ind AS 116 Leases
Ind AS 1 Presentation of Financial Statements
Ind AS 2 Inventories
Ind AS 7 Statement of Cash Flows
Ind AS 8 Accounting Policies, Changes in Accounting Estimates and Errors
Ind AS 10 Events after the Reporting Period
Ind AS 11 Construction Contracts (Omitted)
Ind AS 12 Income Taxes
Ind AS 16 Property, Plant and Equipment
Ind AS 19 Employee Benefits
Ind AS 20 Accounting for Government Grants and Disclosure of Government Assistance
Ind AS 21 The Effects of Changes in Foreign Exchange Rates
Ind AS 23 Borrowing Costs
Ind AS 24 Related Party Disclosures
Ind AS 27 Separate Financial Statements
Ind AS 28 Investments in Associates and Joint Ventures
Ind AS 29 Financial Reporting in Hyperinflationary Economies
Ind AS 32 Financial Instruments: Presentation
Ind AS 33 Earnings per Share
Ind AS 34 Interim Financial Reporting
Ind AS 36 Impairment of Assets
Ind AS 37 Provisions, Contingent Liabilities and Contingent Assets
Ind AS 38 Intangible Assets
Ind AS 40 Investment Property
Ind AS 41 Agriculture
Companies following Ind-AS must include the following in their financial statements:
- Balance Sheet
- Statement of Profit and Loss
- Statement of Changes in Equity
- Statement of Cash Flows
- Notes
Here’s the distinction between these terms:
- IFRS: International Financial Reporting Standards are global standards for financial reporting and accounting, applicable in over 100 countries, issued by the International Accounting Standards Board (IASB).
- Ind-AS: Indian Accounting Standards are the Indian equivalent of IFRS, tailored to align with the Indian economy’s requirements.
- IAS: International Accounting Standards were the predecessor to IFRS, issued by the International Accounting Standards Committee (IASC). They have been superseded by IFRS since 2001.
- AS: Accounting Standards are the existing standards followed in India. To harmonize with international practices and address complex transactions, Ind-AS were introduced for larger enterprises. Thus, India follows two sets of accounting standards: AS and Ind-AS.
