The world is going to be a village. So it’s time to standardize the business practices all over the world. Uniform Accounting standards & practices, all over the world is demand of the time. Indian accounting standards are also converged accordingly. Hence “Applicability of Indian Accounting Standards (Ind AS)” is very important issue for Indian companies, which is discussed in this article.
Accounting Standards in India are issued by Institute of Chartered Accountants of India (ICAI). Now these standards are aligned with International Financial Review Standards (IFRS). Accordingly, New Indian AS are introduced by Central Government.
The Central Government has made new rules in this regard which is called as Companies (Indian Accounting Standards) Rules, 2015. These rules are in force from 1st April 2015.
Applicability of Indian Accounting Standards (Ind AS)
Voluntary compliance
Any company may comply with Indian AS for Financial statements beginning with period on or after 1st April 2015, with the comparatives of period ending on 31st March, 2015, or thereafter;
Mandatory Compliance
It is mandatory for the following companies to comply with Indian AS for financial statements beginning with period on or after 1st April 2016, with the comparatives of period ending on 31st March, 2016, or thereafter.
- Companies whose securities are listed or are in process of listing in any stock exchange in India or outside India and having net worth of Rs. 500 crore or more;
- Companies other than above and having net worth of Rs. 500 Crore or more;
- Holding, subsidiaries, joint venture or associates of above companies.
It is also mandatory for the following companies to comply with Indian AS for financial statements beginning with period on or after 1st April 2017, with the comparatives of period ending on 31st March, 2016, or thereafter.
- Companies whose securities are listed or are in process of listing in any stock exchange in India or outside India and having net worth of less than Rs. 500 crore or more;
- Companies other than above and having net worth of Rs. 250 Crore but less than Rs. 500 Crore or more;
- Holding, subsidiaries, joint venture or associates of above companies.
Note:
- Securities listed or in process of listed in SME Exchange are not included in above companies.
- The net worth is calculated based on stand alone financial statements of company as on 31st March 2014 or first audited financial statements after this date.
- The companies which were not in existence or exiting companies falling under above rules of applicability of AS, the net worth is calculated based on the first audited financial statements ending after that date. If these companies are meeting the netwoth limit for first time at the end of financial year, then they shall follow the Indian AS from next accounting year. For example if the companies meet the networth limit as on 31st march 2017 then the Ind AS will be applicable from financial year 2017-18.
- Ind AS will be applied to both stand alone financial statements and consolidated financial statements.
- Overseas subsidiaries, associates, joint ventures and other similar entities of an Indian company may prepare its standalone financials statements in accordance to requirement of specific jurisdiction.
- Once any Indian company applies Ind AS voluntarily or mandatory, then it must follow them consistently for future years.
Exemptions:
The insurance companies, banking companies and non-banking finance companies shall not be required to apply Indian Accounting Standards (Ind AS) for preparation of their financial statements either voluntarily or mandatory as specified in sub-rule (1) of rule 4.
General Instruction for application of Ind As as per Rule 3
(1) Indian AS are intended to be in conformity with the provisions of laws. However, if due to amendments in the law, a particular Indian AS is found to be not in conformity with such law, the provisions of the said law shall prevail and the financial statements shall be prepared in conformity with such law.
(2) Indian AS are intended to apply only to items which are material.
(3) The Indian AS having paragraphs in bold italic type and plain type, have equal authority. Paragraphs in bold italic type just indicate the main principles of the particular AS.
List & Full text of Indian AS issued by MCA
| Notifications | Description (Click text for full AS) |
| G.S.R 111(E) dated 16 Feb 2015 | The Companies (Indian Accounting Standards) Rules, 2015. |
| Indian Accounting Standard (Ind AS) 101 | First-time Adoption of Indian Accounting Standards |
| Indian Accounting Standard (Ind AS) 102 | Share-based Payment |
| Indian Accounting Standard (Ind AS) 103 | Business Combinations |
| Indian Accounting Standard (Ind AS) 104 | Insurance Contracts |
| Indian Accounting Standard (Ind AS) 105 | Non-current Assets Held for Sale and Discontinued Operations |
| Indian Accounting Standard (Ind AS) 106 | Exploration for and Evaluation of Mineral Resources |
| Indian Accounting Standard (Ind AS) 107 | Financial Instruments: Disclosures |
| Indian Accounting Standard (Ind AS) 108 | Operating Segments |
| Indian Accounting Standard (Ind AS) 109 | Financial Instruments |
| Indian Accounting Standard (Ind AS) 110 | Consolidated Financial Statements |
| Indian Accounting Standard (Ind AS) 111 | Joint Arrangements |
| Indian Accounting Standard (Ind AS) 112 | Disclosure of Interests in Other Entities |
| Indian Accounting Standard (Ind AS) 113 | Fair Value Measurement |
| Indian Accounting Standard (Ind AS) 114 | Regulatory Deferral Accounts |
| Indian Accounting Standard (Ind AS) 115 | Revenue from Contracts with Customers |
| Indian Accounting Standard (Ind AS) 1 | Presentation of Financial Statements |
| Indian Accounting Standard (Ind AS) 2 | Inventories |
| Indian Accounting Standard (Ind AS) 7 | Statement of Cash Flows |
| Indian Accounting Standard (Ind AS) 8 | Accounting Policies, Changes in Accounting Estimates and Errors |
| Indian Accounting Standard (Ind AS) 10 | Events after the Reporting Period |
| Indian Accounting Standard (Ind AS) 12 | Income Taxes |
| Indian Accounting Standard (Ind AS) 16 | Property, Plant and Equipment |
| Indian Accounting Standard (Ind AS) 17 | Leases |
| Indian Accounting Standard (Ind AS) 19 | Employee Benefits |
| Indian Accounting Standard (Ind AS) 20 | Accounting for Government Grants and Disclosure of Government Assistance |
| Indian Accounting Standard (Ind AS) 21 | The Effects of Changes in Foreign Exchange Rates |
| Indian Accounting Standard (Ind AS) 23 | Borrowing Costs |
| Indian Accounting Standard (Ind AS) 24 | Related Party Disclosures |
| Indian Accounting Standard (Ind AS) 27 | Separate Financial Statements |
| Indian Accounting Standard (Ind AS) 28 | Investments in Associates and Joint Ventures |
| Indian Accounting Standard (Ind AS) 29 | Financial Reporting in Hyperinflationary Economies |
| Indian Accounting Standard (Ind AS) 32 | Financial Instruments: Presentation |
| Indian Accounting Standard (Ind AS) 33 | Earnings per Share |
| Indian Accounting Standard (Ind AS) 34 | Interim Financial Reporting |
| Indian Accounting Standard (Ind AS) 36 | Impairment of Assets |
| Indian Accounting Standard (Ind AS) 37 | Provisions, Contingent Liabilities and Contingent Assets |
| Indian Accounting Standard (Ind AS) 38 | Intangible Assets |
| Indian Accounting Standard (Ind AS) 40 | Investment Property |
| Indian Accounting Standard (Ind AS) 41 | Agriculture |
A new Plan for applicability of Indian Accounting Standards for commercial Banks, Insurance Companies and Non Banking Financial Companies is announced on 18th Jan 2016. Read it Here.
Please comment for any query on applicability of Indian Accounting standards (Ind AS).
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We are a Private limited Company. As on 31st March 2016 we crossed first time the threshold limit of net-worth of 250 Crs.
Kindly confirm from which date Ind AS will be applicable on our Company i.e. from 1st April 2016 or 1st April 2017.
Not applicable for the FY 2016-17 as networth has not exceeded Rs.500 crores during FY 2015-16. Company need to comply with Ind AS for FY 2017-18
We are a Limited Company with Net-worth of Rs. 77 crs. We are the producer and manufacturer of Tea . My question is, in our accounts where the changes will effect in Profit & Loss and Balance Sheet under Ind-AS
My company follows a year ending on 31st December as being a subsidiary of foreign company. It’s net worth falls under the criteria of more than 250 crores and less than 500 crores. As per MCA notification such type of companies is to follow Ind AS from 01.04.2017. Kindly recommend when should we start adopting such practice?
I have a query regarding applicability of Ind-AS
A is a US based company which is registered n listed outside india. B Ltd. is a indian company which is not listed and it is a subsidiary of A company. than B ltd is required to make the F.S as per IND-AS because its parent is listed??
Laws says “Holding, subsidiaries, joint venture or associates of companies to whom Ind As is applicable. As per definitions of company it means a company incorporated under this Act or under any previous company law;
So in my views, in your case it should not be applicable.
Our client is a fully owned subsidiary of US based company. Is Ind AS applicable to that Indian subsidiary if the holding company has networth more than Rs 500 crores ?
Very concise and very informative
Hi Sir,
In view of the companies act 2013, amendment 2017 the definition of section 2(46) the holding company definition has been amended with an explanation that holding company – the term ‘company’ will include body corporate which includes foreign companies.
In view of this change will there be an applicability of IndAS for indian subsidiary of foreign listed holding company with net worth greater than 500 crores. Sir could you kindly respond to this at the earliest.
Thanks
Kindly Provide link which will provide me ind as rules in english as on MCA it is in Hindi.
my company has networth of 276 cr on 31.03.2017 , however it distributed dividend in december, 2017 so as on 31.03.2018 my networth is less than 250 cr so do ind as apply to my company