Indian Accounting Standards (Ind AS): Objectives, Applicability, & List
Indian Accounting Standards (Ind AS): Objectives, Applicability, & List
Indian Accounting Standards (Ind AS) are a set of financial reporting standards harmonized with the International Financial Reporting Standards (IFRS) to enhance global accessibility and transparency for Indian companies. As Indian businesses expand their global reach, converging local reporting practices with international standards has become essential. By adopting Ind AS, companies in India improve the reliability of their financial statements, facilitating informed decision-making. These standards, issued by the Institute of Chartered Accountants of India (ICAI), ensure that Indian businesses comply with international norms, fostering trust and credibility in the global market. This article provides complete information on Indian Accounting Standards (Ind AS).
Streamline your finances with expert accounting services from IndiaFilings!!
Get Expert Accountant!
What is the Indian Accounting Standards (Ind AS)?
Indian Accounting Standards (Ind AS) are IFRS-converged standards issued by the Central Government of India. They are developed under the supervision of the Accounting Standards Board (ASB) of the Institute of Chartered Accountants of India (ICAI) and in consultation with the National Financial Reporting Authority (NFRA). These standards are mandatory for certain Indian companies, ensuring their financial statements align with global practices. Established in 1977, the ASB oversees the formulation and implementation of Ind AS, making them the primary accounting standards adopted by companies in India.
Objectives of Indian Accounting Standards
The Indian Accounting Standards (Ind AS) were introduced in India to align Indian accounting practices with international standards. Below, we have given the rest of the essential objectives of Indian Accounting Standards:
- Uniformity and Consistency: Ind AS aims to establish a consistent framework for accounting practices across various industries and sectors in India. This uniformity ensures that financial statements are prepared using a standard set of principles and methods, making them more comparable and understandable.
- International Convergence: One of Ind AS’s primary goals is to converge Indian accounting standards with International Financial Reporting Standards (IFRS). This convergence facilitates international trade, investment, and cross-border transactions.
- Transparency and Accountability: It promotes transparency in financial reporting by requiring companies to disclose relevant information about their financial performance, position, and cash flows. This transparency enhances accountability and helps stakeholders make informed decisions.
- Reliability and Credibility: It ensures that financial information is reliable and credible by providing a framework for preparing financial statements that reflect the economic substance of transactions and events. This enhances the credibility of financial reporting in India.
- Investor Protection: It aims to protect investors by providing them with reliable and comparable financial information, which helps them make informed decisions about their investments.
- Facilitation of Cross-Border Transactions: Convergence with IFRS facilitates cross-border transactions and investments by reducing the complexities of reconciling financial statements prepared under different accounting standards.
Advantages of Indian Accounting Standards
Below are some of the advantages of Indian Accounting Standards,
- Indian Accounting Standards provide a clear and consistent framework for accounting practices, reducing ambiguity and simplifying financial reporting.
- It ensures that companies follow standardized accounting practices, promoting industry consistency and comparability.
- Convergence with International Financial Reporting Standards (IFRS) facilitates easier comparison of Indian companies with their global counterparts, enhancing their attractiveness to international investors.
- The standardized framework of Ind AS makes financial statements more comparable, aiding investors, creditors, and other stakeholders in making decisions.
- It provides a clear framework for auditors, making the auditing process more efficient and effective.
- Adherence to Ind AS enhances the credibility of financial statements, increasing investor confidence.
- It provides a standardized set of metrics for assessing management performance, facilitating better decision-making and accountability.
- The standardized framework and increased transparency reduce the opportunities for fraudulent activities and manipulation of financial information.
List of Indian Accounting Standards (Ind AS List)
In the table, we have provided the major list of Indian Accounting Standards,
| Indian Accounting Standards Number | Description |
| 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 Reporting Period |
| Ind AS 11 | Construction Contracts |
| 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 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 |
| Ind AS 101 | First-time Adoption of Ind AS |
| Ind AS 102 | Share-Based Payments |
| Ind AS 103 | Business Combinations |
| 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 |
Applicability of Indian Accounting Standards
Below, we have given a detailed overview of the Applicability of Indian Accounting Standards (IND AS):
Phase-Wise Adoption of IND AS:
The Ministry of Corporate Affairs (MCA) has implemented a phased approach to the convergence of Indian Accounting Standards (IND AS) from the existing accounting standards. This phased adoption ensures a smooth transition for businesses of varying sizes and complexities.
Phase I (Effective from 1st April 2016)
- Mandatory for: Listed and unlisted companies with a net worth of ₹500 crore or more (calculated for the financial years 2013-14, 2014-15, and 2015-16).
Phase II (Effective from 1st April 2017)
- Mandatory for: Listed companies and companies in the process of listing (as on 31st March 2016) with a net worth of ₹250 crore to ₹500 crore (calculated for the financial years 2013-14, 2014-15, 2015-16, and 2016-17).
Phase III (Effective from 1st April 2018)
- Mandatory for: Banks, Non-Banking Financial Companies (NBFCs), and Insurance companies with a net worth of ₹500 crore or more (calculated for the financial years 2015-16, 2016-17, and 2017-18).
- Note: The Insurance Regulatory and Development Authority of India (IRDA) will notify a separate set of IND AS for banks and insurance companies.
Phase IV (Effective from 1st April 2019)
- Mandatory for: NBFCs with a net worth of ₹250 crore to ₹500 crore (calculated for the financial years 2015-16, 2016-17, and 2017-18).
Important Note:
- If a company becomes subject to IND AS, its subsidiaries, holding companies, associated companies, and joint ventures must also adopt IND AS, regardless of their net worth.
- Indian companies’ foreign operations may continue to use their jurisdictional accounting standards for standalone financial statements. However, these entities must report IND AS-adjusted numbers to their Indian parent company for consolidated financial reporting.
Voluntary Adoption of IND AS:
Companies can voluntarily adopt Ind AS for their financial reporting periods commencing on or after April 1, 2015. If a company chooses to voluntarily adopt Ind AS, it must also prepare a comparative report for the periods ending March 31, 2015, or later to clearly compare the new and old accounting standards. However, once a company has transitioned to Ind AS, it cannot revert to the previous accounting standards.
Difference between Ind AS and IFRS
Below, we have give some of the essential differences between IND AS and IFRS,
| Feature | IFRS | IND AS |
| Definition | Globally recognized accounting standards. | Indian adaptation of IFRS. |
| Formulated by | International Accounting Standards Board (IASB). | Ministry of Corporate Affairs (MCA), India. |
| Implemented by | 144 countries worldwide. | Exclusively implemented in India. |
| Disclosure | Companies must disclose compliance with IFRS. | No such disclosure requirement. |
| Components of Financial Statement | Statement of financial position. Statement of profit and loss Statement of changes in equity Statement of cash flows |
|
| Format of Balance Sheet | Specific guidelines for current and non-current classification. | No specific format requirements, but guidelines exist for presentation. |
Download the Indian accounting standards pdf .
MCA Notification on Companies (Indian Accounting Standard) Amendment Rules, 2024
On 14th August 2024, The Ministry of Corporate Affairs issued an official notification regarding the Companies (Indian Accounting Standards) Amendment Rules, 2024. It introduced significant amendments to the Companies (Indian Accounting Standards) Rules, 2015, effective from the date of their publication in the Official Gazette.
Companies-Indian-Accounting-Standard-Amendment-Rules-2024MCA Notification on Companies (Indian Accounting Standards) Second Amendment Rules, 2024
On September 9, 2024, the MCA published the Companies (Indian Accounting Standards) Second Amendment Rules, 2024, introducing significant changes to the Indian Accounting Standards (IndAS) framework. These amendments, made under the Companies Act, 2013, aim to enhance the quality and consistency of financial reporting in India. The rules, which came into effect immediately upon publication, were developed in consultation with the National Financial Reporting Authority (NFRA) and reflect their recommendations.
companies indian accounting standards second amendment rules 2024Conclusion
Indian Accounting Standards (IND AS) have been implemented in India to align the country’s financial reporting practices with global standards. By converging with International Financial Reporting Standards (IFRS), IND AS aims to enhance financial statements’ transparency, comparability, and reliability. This convergence benefits Indian companies by facilitating cross-border transactions, attracting international investors, and improving the overall credibility of the Indian financial reporting landscape.
Simplify your accounting with IndiaFilings’ professional and personalized service!!
Get Expert Accountant!