The Companies (Indian Accounting Standards) Rules

The Companies (Indian Accounting Standards) Rules, 2015

The Companies (Indian Accounting Standards) Rules, 2015

The Companies (Indian Accounting Standards) Rules, 2015 has been made effective from 1st April 2015. Present article contains the provisions relating to applicability of the same.

Stage-Wise Applicability of the Indian Accounting Standards –

Rule governing applicability of the Indian Accounting Standards are contained under rule 4 of the Companies (Indian Accounting Standards) Rules, 2015. According to rule 4 (1) (i), from accounting period beginning on or after 1st April 2015, any company and its holding, joint venture, subsidiary or associate company can voluntarily comply with the Indian Accounting Standards, however, the mandatory applicability of the same are summarized hereunder:

  1. Following are the companies which are required to comply with the Indian Accounting Standards for the accounting period on or after 1st April 2016:
    • The company having a net worth of Rs. 500 Crore or more and the equity or debt securities of such companies are being listed or are in the process of being listed on any of the stock exchange in India or Outside India;
    • Unlisted companies having a net worth of more than Rs. 500 Crore;
    • Holding, joint ventures, subsidiaries or associate companies of above mentioned companies.
  1. Following are the companies which are required to comply with the Indian Accounting Standards for the accounting period on or after 1st April 2017 –
    • The company having a net worth of less than Rs. 500 Crore and the equity or debt securities of such companies are being listed or is in the process of being listed on any of the stock exchange in India or Outside India;
    • Unlisted companies having a net worth between Rs. 250 Crore and Rs. 500 Crore;
  • Holding, joint ventures, subsidiaries or associate companies of above-mentioned companies.

Applicability of Indian Accounting Standard to NBFCs

  1. Following are the list of Non-Banking Financial Companies which are required to comply with the Indian Accounting Standards for the accounting period on or after 1st April 2018 –
    • Non-Banking Financial Companies having a net worth of Rs. 500 Crore or more;
    • Holding, joint ventures, subsidiaries or associate companies of NBFCs covered above.
  1. Following are the list of Non-Banking Financial Companies which are required to comply with the Indian Accounting Standards for the accounting period on or after 1st April 2019 –
    • Non-Banking Financial Companies, having net-worth of less than Rs. 500 Crore, whose equity or debt securities are being listed or are in the process of being listed on any of the stock exchange in India or Outside India;
    • Unlisted Non-Banking Financial Companies having net-worth between Rs. 250 Crore and Rs. 500 Crore;
  • Holding, joint ventures, subsidiaries or associate companies of above mentioned companies.

It must be noted that the Non-Banking Financial Company shall apply the Indian Accounting Standard from the immediate next accounting year in which the NBFC reaches the specified threshold limit as mentioned above.

For example, if the NBFCs reaches the threshold limit on 31st March 2019, for the first time, then, Indian Accounting Standards shall apply to such NBFC for the financial year 2019-2020.

Other Important Points

  • Indian Accounting Standards would apply to both stand-alone financial statements and consolidated financial statements;
  • Overseas associate, joint venture, subsidiary and other entity of Indian Company are allowed to prepare their standalone financial statements as per the requirement of their jurisdictions;
  • In case Indian Accounting Standards are applicable to any Indian company which is subsidiary, joint venture, associate and other similar entities of a foreign company, then, such Indian company is required to prepare its financial statements in accordance with the Indian Accounting Standards;
  • The company which voluntarily opts for the Indian Accounting Standards are required to consistently follow the same and prepare its financial statements accordingly;
  • Following is the list of Indian Accounting Standards –
    • 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 the reporting period
    • IND AS 11 – Construction contracts
    • IND AS 12 – Income Tax
    • IND AS 16 – Property, plant and equipment
    • IND AS 17 – Lease
    • IND AS 18 – Revenue
    • IND AS 19 – Employee Benefits
    • IND AS 20 – Accounting for Government Grants and Disclosure of Government assistance
    • IND AS 21 – Effect of change in foreign exchange rates
    • IND AS 23 – Borrowing costs
    • IND AS 24 – Related parties disclosure
    • IND AS 27 – Separate financial statements
    • IND AS 28 – Investment in joint venture and associates
    • IND AS 29 – Financial reporting in hyperinflationary economies
    • IND AS 32 – Financial instruments presentation
    • IND AS 33 – Earning Per Share
    • IND AS 34 – Interim Financial Reporting
    • IND AS 36 – Impairment of Assets
    • IND AS 37 – Provisions, contingent liabilities and assets
    • IND AS 38 – Intangible asset
    • IND AS 40 – Investment Property
    • IND AS 41 – Agriculture
    • IND AS 101 – First-time adoption of IND AS
    • IND AS 102 – Share-based payment
    • IND AS 103 – Business combination
    • IND AS 104 – Insurance contract
    • IND AS 105 – Non-current assets held for sale and discontinued operations
    • IND AS 106 – Exploration and evaluation of mineral resources
    • IND AS 107 – Financial instruments disclosure
    • IND AS 108 – Operating segments
    • IND AS 109 – Financial instruments
    • IND AS 110 – Consolidated financial statements
    • IND AS 111 – Joint agreement
    • 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

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