India's new accounting standards substantially converged with IFRS Standards
13 November 2015
A new set of Indian Accounting Standards (Ind AS) that are based on and
substantially converged with IFRS Standards as issued by the
International Accounting Standards Board (IASB) have been notified (and
have therefore become authoritative) under Indian law. They are being
phased in for different categories of companies from 2015 to 2017.
In 2013, India revised its Companies Act to require listed and large
companies to prepare consolidated financial statements in conformity
with Ind AS, which was to be adopted by the Institute of Chartered
Accountants of India (ICAI). ICAI has subsequently adopted those
standards.
Ind AS reflects some modifications to IFRS Standards that are
generally optional, though several are mandatory, and of limited scope.
An appendix to each Ind AS explains 'the major differences, if any,
between' the Ind AS and the corresponding IFRS Standard.
Ind AS is being phased in as follows:
Companies other than insurance companies, banking companies, and non-banking finance companies
Ind AS is required or permitted as follows:
- All companies, including those who securities do not trade in a
public market and those whose securities trade on the SME Exchange, are
permitted to use Ind AS for accounting periods beginning on or after 1
April 2015.
- The following companies are required to use Ind AS starting with accounting periods beginning on or after 1 April 2016:
- Companies whose equity or debt securities are listed or are
in the process of being listed on any stock exchange in India (other
than the SME Exchange) or outside India and having net worth of Rupees
5,000,000,000 (approximately US$75,000,000);
- Companies other than those above having a net worth of Rupees 5,000,000,000 (approximately US$75,000,000) or more;
- Holding, subsidiary, joint venture or associate companies of those above.
- The following companies are required to use Ind AS starting with accounting periods beginning on or after 1 April 2017:
- Companies whose equity or debt securities are listed or are
in the process of being listed on any stock exchange in India (other
than the SME Exchange) or outside India and having a net worth of less
than Rupees 5,000,000,000 (approximately US$75,000,000);
- Unlisted companies having a net worth of Rupees
2,500,000,000 crore (approximately US$37,000,000) or more but less than
Rupees 5,000,000,000 (approximately US$75,000,000);
- Holding, subsidiary, joint venture or associate companies of those above.
Insurance companies, banking companies, and non-banking finance companies
These companies must follow the accounting standards prescribed by
the Reserve Bank of India (RBI), which is the relevant regulator. On 29
September 2015, RBI announced:
‘The Reserve Bank has recommended to the Ministry of Corporate
Affairs a roadmap for the implementation of Ind AS by banks and
non-banking financial companies from 2018-19 onwards.´
We have accordingly updated our website profile on the use of IFRS in India. You can view the profiles here.