BTL 783 - Ind AS

 

The Banking Tutor’s Lessons

BTL 783                                                                   12-05-2025

Ind AS

Accounting standards have been developed in India over time. It is also called Ind As. Such standards need to be adopted by various corporate form and NBFCs in India under the supervision of the Accounting Standards Board (ASB).

The Accounting Standards Board was established in 1977 as a regulator and body.

ASB is a professional and autonomous body managed by the Institute of Chartered Accountants of India (ICAI).

Apart from this, there are other bodies such as Confederation of Indian Industry (CII), Federation of Indian Chambers of Commerce and Industry (FICCI) and Associated Chambers of Commerce and Industry of India (ASSOCHAM) which regulate ASB.

Individuals, professors and academics from the above-mentioned bodies acquire different standards with regard to accounting.

Indian accounting standards were developed to harmonize standards related to international accounting and reporting. International Accounting Standards comply with International Financial Reporting Standards (IFRS).

The Indian government body that recommends this standard to the Department of Corporate Affairs is the National Advisory Committee on Accounting Standards (NACAS).

Objectives of Indian accounting standards (Ind As): Following are the objectives of applying Indian accounting standards: 

Ensure companies in India adopt these standards to implement internationally recognized best practices. 

Ensure that compliance is maintained worldwide. 

Have a single framework for a single accounting system. 

The standard was developed in accordance with IFRS principles. Therefore, it serves as a guide for the implementation of the standard. 

Accounting systems used in India can be analyzed and understood by global companies. 

This will make the annual financial statements and company accounts transparent. 

These standards are harmonized to ensure that companies comply with global requirements. 

A wider scope is acceptable through this Indian accounting standard as Indian companies have expanded their global scope as compared to the past.

Applicability of Ind As:

The Government of India and the Department of Corporate Affairs have announced the recognition and adoption of Indian accounting standards by all companies in India. This notice was filed under the Company Accounting Standards Act (US IND) of 2015. In accordance with the notification above, all companies that receive this notification will be required to receive Ind As in stages during the 2016-17 fiscal year. Since its adoption, there have been three notification changes in 2016, 2017 and 2018.

Benefits of Adopting Indian Accounting Standards:

Adopting Indian accounting standards comes with several advantages: 

Harmonization: By adopting these standards, companies can harmonize accounting rules. Global accounting principles can be built through harmonization.

International Base: These are Internationally recognized accounting standards. So when a company wants to expand internationally, such principles are adopted.

Global Acceptance: The existence of these standards guarantees international recognition of all government institutions and agencies.

Compliance: By adopting these standards, companies can ensure effective compliance.

Introduction Phase of Indian Accounting Standards: In the notification, the Ministry of Corporate Affairs has highlighted the requirement of Indian companies to gradually adopt Indian accounting standards in the 2016-17 reporting year.

This standard is adopted in stages, depending on the net worth and listing status of the exchange.

MCA has divided the applicability and adoption of these accounting standards according to different principles.

India’s system of voluntary adoption of accounting standards was applied to companies in the 2014-15 and 2015-16 fiscal years. These standards can be adopted voluntarily or mandatorily. However, MCA states that the standard must be adopted by the company for a certain period of time.

Following are the stages of implementation:

Phase I: This phase is classified as mandatory according to the Indian accounting standards required by the companies. This phase is implemented starting April 1, 2016.

Phase I applies to the following companies: Listed Companies (companies whose securities are listed on a recognized stock exchange). Companies with a net worth of more than Rs. 500 crores. Note – For the application of net assets, the company’s financial statements for the last three years are audited. Since this accounting standard was introduced in 2016-17, the previous fiscal years are taken into account, namely 2013-14, 2014-15, and 2015-16.

Phase II: At this point, all companies have to adopt Ind AS (Indian Accounting Standards) from 1 April 2017. Therefore, the next fiscal year is considered for the adoption of Indian Accounting Standards.

Phase II applies to the following companies: Listed companies (companies whose securities are listed on a recognized stock exchange – as of March 31, 2016. Companies that have the net worth of more than Rs. 250 crore but less than Rs 500 crore.

Note – Since this accounting standard was introduced in 2016-17, previous fiscal years are taken into account; 2013-14, 2014-15 and 2015-16.

Phase III: This stage is considered mandatory for the implementation of Ind As by all types of banks, NBFIs, SEBI regulated companies and insurance companies.

This phase is effective from April 1, 2018.

Phase III applies to the following companies:

Companies having net worth more than Rs. 500 crores. The net worth requirement will only apply to the company until April 1, 2018.

The Insurance Regulatory and Development Authority of India (IRDAI) ensures by separate notification that the insurer meets the net asset requirements.

The net worth requirement of NBFC and other financial institutions is calculated taking into account the last three fiscal years namely 2015-16, 2016-17 and 2017-18.

Phase IV: This phase will only apply to all NBFCs whose net worth is more than Rs. 250 crores but less than Rs 500 crores. This implementation will be taken into account starting April 1, 2019.

Indian accounting standards apply to subsidiaries or associate companies. If accounting standards are adopted by Indian companies, it will apply to all forms of subsidiary i.e. sister, parent and associate companies. Either form of individual qualification is not possible for this type of company. This means that the IND can be applied automatically.

If a company is controlled by a foreign company, the accounting principles should be viewed as a separate basis. IND As application is not required for these companies.

Indian Accounting Standards – Key Factors for Transformation:

There are various significant and key factors that we need to consider when Indian companies adopt the above standards:

Activities managed by the organization.

Identify and analyze various tax consequences resulting from the application of these standards. 

Redefinition and revision of annual financial statements to ensure compliance with standards.

Identify and review issues related to accounting standards. 

Revision of contracts and conclusion of negotiations carried out by various parties. 

Preparation of financial statements annually in accordance with the requirements of Indian accounting standards.

The following table provides a list of the Ind As: (applicable to Bankers)

Sr No	Points related to
Ind AS 1	Presentation of Financial Statements
Ind AS 2	Inventories Accounting
Ind AS 7	Statement of Cash Flows
Ind AS 8	Accounting Policies, Changes in Accounting Estimates and Errors
Ind AS 10	Events after Reporting Period
Ind AS 12	Income Taxes
Ind AS 16	Property, Plant and Equipment
Ind AS 17	Leases
Ind AS 18	Revenue
Ind AS 19	Employee Benefits
Ind AS 20	Accounting for Government Grants
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 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 101	First-time adoption of Ind AS
Ind AS 105	Non-Current Assets Held for Sale and Discontinued Operations
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

The adoption of Indian Accounting Standards (Ind SA) has improved the comparability of financial information of Indian companies worldwide.

However, Ind AS involves the application of several new and complex concepts. This requires a high level of assessment and evaluation, accompanied by detailed qualitative and quantitative information according to Ind AS.

It is crucial to understand that these Indian Accounting Standards (Ind SA) upscale the methodology of Indian Accounting.

Sekhar Pariti

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