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Ind AS convergence with IFRS


Finally the wait is over. Indian Accounting Standards converged with IFRS are here. After issuing the revised roadmap for implementing Ind AS in January 2015, the Ministry of Corporate Affairs (MCA) has come up with the phase wise adoption of Ind AS, India’s Accounting Standards converged with IFRS. India has chosen the path of IFRS convergence and not adoption. The MCA has issued a notification dated 16 February 2015 announcing the Companies (Indian Accounting Standards) Rules, 2015 for the applicability of Ind AS. A total of 39 Ind AS has been notified. Now let’s look into the various aspects of Ind AS one by one.


The application of Ind AS is based on the listing status and net worth of a Company. Also these standards will be applied to various threshold companies in phased out manner. The below table summarises the various phase of application –

1Companies having Net worth of greater than or equal to INR 500 crore.1 April 2016
2Listed Companies and companies having Net worth of greater than or equal to INR 250 crore.1 April 2017

– Companies covered under phase 1 will also require comparative Ind AS information for the period 1 April 2015 to 31 March 2016. So the companies under this phase have already started their Ind AS conversion planning and activities.

It is important to note that the Ind AS will also apply to subsidiaries, joint ventures, associates and holding companies of the entities covered in various phases. Companies not covered by the new Ind AS rules can voluntarily adopt Ind AS. Once adopted, they cannot switch back.


The following Companies are exempted from applying Ind AS –

  • Companies listed on SME exchanges.
  • Companies not covered by the new Ind AS rules will continue to apply the existing accounting standards.

Explanations/ Clarifications

The notification has clarified number of open points, few are stated below –

  • The date and manner of calculating net worth has been defined. The net worth needs to be calculated based on standalone financials of the company as on 31 March 2014 or first audited period ending thereafter. Net worth defined is similar to the one defined in section 2(57) of Companies Act 2013. It will be total of paid up share capital, reserves created out of profits (except revaluation and amalgamation reserve) and securities premium. From this we need to deduct accumulated losses, deferred and miscellaneous expenditure to the extent not written off.
  • Ind AS will apply to both consolidated and standalone financial statements of the company covered by the rule. This is very helpful as the companies will not be required to maintain dual accounting system.
  • Overseas subsidiaries, joint ventures and associates of an Indian Company which is covered by new Ind AS rule, are not required to prepare their standalone financials as per Ind AS. However, for the purpose of consolidation, such overseas entities should give Ind AS adjusted financials.
  • Insurances, banking and non- financial companies are not required to apply Ind AS either voluntarily or mandatorily.
  • In case of conflict with Ind AS and Law, the provisions of Law shall prevail and financial statements should be prepared in conformity with it.
  • Preparation of financial statements as per IFRS issued by IASB (true IFRS) has been ruled out

Comparison between Ind AS and IFRS

As stated earlier, India has chosen the path of IFRS conversion and not adoption. Therefore, there are few differences between Ind AS and IFRS. These are known as carve outs. These carve outs are there keeping in mind Indian economic environment and reporting requirements. A few are stated below –

  • Under Ind AS, only one statement comprising of both profit and loss and other comprehensive income will be presented. Unlike IFRS, there is no option to present other comprehensive income under a separate statement.
  • Ind AS allows presentation of expenses by nature only. Presentation of expenses by function is not allowed. Under IFRS, this is policy election.
  • Under Ind AS, earnings per share (EPS) are required to be presented for both standalone and consolidated financial statements. Under IFRS, earning per share is not required in separate financial statement if both separate and consolidated financial statements are presented.
  • Under Ind AS, the bargain purchase gain on business combination is to be recognised either in other comprehensive action or capital reserve but not profit and loss. Under IFRS, the same is recognised in profit and loss.
  • Under Ind AS, investment property is to be accounted using only cost model with fair value disclosure. Under IFRS, both cost and fair value options of accounting are available.

Future Ahead

Implementing Ind AS is likely to impact key performance metrics. Ind AS implementation can have wide range of impact on Company’s processes, systems, controls, financials, income taxes and agreements. The Companies need to carefully examine and evaluate the Ind AS transition provision and accounting policy elections. Indian Inc. now needs to get ready to embrace this transformation.