Applicability of Ind AS – Indian Accounting Standards

Ministry of corporate affairs has notified phases for convergence to Ind AS from the current accounting standards to the Indian Accounting Standards (Ind AS).

Account Group

As per the notification, The Companies and their auditors shall comply with the Indian Accounting Standards (Ind AS) in the preparation of their financial statements and audit respectively.

Applicability of Ind As with effect from 1st April 2016

Ind AS is applicable on mandatory basis for the accounting period beginning on or after 1st April 2016, with comparative for the period ending 31st March 2016 or thereafter, for the companies specified below;

  1. Companies whose equity and/or debt securities are listed or are in the process of listing on any stock exchange in India or outside India and having a net worth of Rs. 500 Crore or more.
  2. Companies other than those covered by clause (a) above and having a net worth of Rs 500 crore or more. (i.e. unlisted companies having net worth of Rs 500 Crore)
  3. Holding, subsidiary, joint venture or associate companies of companies covered by sub-clause (a) and subclause (b) as the case may be.

Applicability of Ind As with effect from 1st April 2017

Following companies shall comply with the Indian accounting standards (Ind AS) for the accounting periods beginning on or after April 1, 2017, with comparatives for the periods ending 31st March 2017, or thereafter, namely:-

  1. Companies whose equity and/or debt securities are listed or are in the process of being listed on any stock exchange in India or outside India and having a net worth of less than Rs. 500 Crore. (i.e. remaining listed companies not covered above)
  2. Unlisted companies having a net worth of 250 Crore or more but less than Rs. 500 crore.
  3. Holding, subsidiary, joint venture or associate companies of companies covered under clause (a) and clause (b) above, as the case may be:

However, Companies whose securities are listed or in the process of listing on SME exchanges shall not be required to apply Indian Accounting Standards (Ind AS). Such companies shall continue to comply with the existing Accounting Standards unless they choose otherwise.

If a company opts to follow Indian accounting standards, it shall be required to follow the Ind AS for all the subsequent financial statements. This means once the Indian Accounting Standards are applied voluntarily, it shall be irrevocable.

Companies not covered by the above roadmap shall continue to apply existing Accounting Standards prescribed in Annexure to the Companies (Accounting Standards) Rules, 2006.

The insurance companies, banking companies and non-banking finance companies shall not be required to apply Indian Accounting Standards (Ind AS) for the preparation of their financial statements either voluntarily or mandatorily.

A private limited company having a net worth of less than Rs. 250 crore is not required to comply with Indian Accounting Standard (Ind As). Provided, such private limited company is not a holding, subsidiary, joint venture or associate company of companies to which Ind AS is applicable.