Ind AS Applicability
Chandan Kumar Gupta
Last Update vor einem Jahr
Approach to IFRS-converged Indian Accounting Standards (Ind AS)
First Step towards IFRS The Institute of Chartered Accountants of India (ICAI) being the premier accounting standards-setting body in India, way back in 2006, initiated the process of moving towards the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) with a view to enhance acceptability and transparency of the financial information communicated by the Indian corporates through their financial statements. This move towards IFRS was subsequently accepted by the Government of India.The Government of India in consultation with the ICAI decided to converge and not to adopt IFRS issued by the IASB. The decision of convergence rather than adoption was taken after the detailed analysis of IFRS requirements and extensive discussion with various stakeholders. Accordingly, while formulating IFRS-converged Indian Accounting Standards (Ind AS), efforts have been made to keep these Standards, as far as possible, in line with the corresponding IFRS Standards (which comprise pronouncements with IAS, IFRS, SIC and IFRIC) and departures have been made where considered absolutely essential. These changes have been made considering various factors, such as, terminology related changes to make it consistent with the terminology used in law, e.g., ‘statement of profit and loss’ in place of ‘statement of comprehensive income’ and ‘balance sheet’ in place of ‘statement of financial position’. Certain other changes have been made considering the economic environment, customs and laws of the country. The ICAI while updating Ind AS, also reconsidered the carve-outs made in Ind AS finalised in 2011 and decided not to continue with certain carve-outs. It was also decided to make certain new carve-outs/carve-in based on the feedback received from various stakeholders.
Government of India commitment to IFRS-converged Ind AS
As per the original roadmap for implementation of IFRS-converged Ind AS issued by the Government of India, initially Ind AS were expected to be implemented from the year 2011. However, keeping in view the fact that certain issues including tax issues were still to be addressed, the Ministry of Corporate Affairs decided to postpone the date of implementation of Ind AS.
Roadmap for implementation of Indian Accounting Standards (Ind AS) for corporates: A Snapshot
Phase I: 1st April 2015 or thereafter (with Comparatives): Voluntary Basis for any company and its holding, subsidiary, JV or associate company
1st April 2016: Mandatory Basis
(a) Companies listed/in process of listing on Stock Exchanges in India or Outside India having net worth of INR 500 crore or more;
(b) Unlisted Companies having net worth of INR 500 crore or more;
(c) Parent, Subsidiary, Associate and JV of above.
Phase II: 1st April 2017: Mandatory Basis (with comparatives):
(a) All companies which are listed/or in process of listing inside or outside India on Stock Exchanges not covered in Phase I (other than companies listed on SME Exchanges);
(b) Unlisted companies having net worth of INR 250 crore or more but less than INR 500 crore;
(c) Parent, Subsidiary, Associate and JV of above.
• Companies listed on SME exchange are not required to apply Ind AS
• Once Ind AS are applicable, an entity shall be required to follow the Ind AS for all the subsequent financial statements.
• Companies not covered by the above roadmap shall continue to apply Accounting Standards notified in Companies (Accounting Standards) Rules, 2006 (These rules have been superseded by Companies (Accounting Standards) Rules, 2021.
Roadmap for Implementation of Indian Accounting Standards (Ind AS) for NBFCs: A Snapshot
Phase I: From 1st April, 2018 (with comparatives):
- NBFCs (whether listed or unlisted) having net worth of INR 500 crore or more
- Holding, Subsidiary, JV and Associate companies of above NBFC other than those already covered under corporate roadmap shall also apply from said date
Phase II: From 1st April, 2019 (with comparatives)NBFCs 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 net worth less than 500 crore:
- NBFCs that are unlisted having net worth of INR 250 crore or more but less INR 500 crore
- Holding, Subsidiary, JV and Associate companies of above other than those already covered under corporate roadmap shall also apply from said date
- Applicable for both Consolidated and individual Financial Statements• NBFC having net worth below INR 250 crore shall not apply Ind AS.
- Adoption of Ind AS is allowed only when required as per the roadmap. Voluntary adoption of Ind AS is not allowed.
➢ IRDAI vide press release dated June 28, 2017 had deferred the implementation of Ind AS for the Insurance Sector in India for a period of two years, whereby the effective date was deferred to FY 2020-21. Thereafter, again in January 2020, IRDAI has deferred Implementation of Ind AS in the Insurance Sector till further notice.
Scheduled Commercial banks (excluding Regional Rural Banks)
➢ RBI vide press release dated April 05, 2018 had deferred the implementation of Ind AS for the Scheduled Commercial Banks (excluding Regional Rural Banks) for a period of one year i.e. effective from 1st April 2019., Thereafter, again in March 2029, RBI vide notification dated March 22, 2019 had again deferred the implementation of Ind AS for the Scheduled Commercial Banks (excluding Regional Rural Banks) till further notice.
Comparison of IFRS with Ind AS
| S No. | IFRS/ IAS | Ind AS | Name |
|---|---|---|---|
| 1 | IAS 1 | Ind AS 1 | Presentation of Financial Statements |
| 2 | IAS 2 | Ind AS 2 | Inventories |
| 3 | IAS 7 | Ind AS 7 | Statement of Cash Flows |
| 4 | IAS 8 | Ind AS 8 | Accounting Policies, Changes in Accounting Estimates and Errors |
| 5 | IAS 10 | Ind AS 10 | Events after the Reporting Period |
| 6 | IAS 12 | Ind AS 12 | Income Taxes |
| 7 | IAS 16 | Ind AS 16 | Property, Plant and Equipment |
| 8 | IAS 19 | Ind AS 19 | Employee Benefits |
| 9 | IAS 20 | Ind AS 20 | Accounting for Government Grants and Disclosure of Government Assistance |
| 10 | IAS 21 | Ind AS 21 | The Effects of Changes in Foreign Exchange Rates |
| 11 | IAS 23 | Ind AS 23 | Borrowing Costs |
| 12 | IAS 24 | Ind AS 24 | Related Party Disclosures |
| 13 | IAS 26 | Ind AS corresponding to IAS 26, Accounting and Reporting by Retirement Benefit Plans, has not been issued as this standard is not applicable to companies. | Accounting and Reporting by Retirement Benefit Plans |
| 14 | IAS 27 | Ind AS 27 | Separate Financial Statements |
| 15 | IAS 28 | Ind AS 28 | Investments in Associates and Joint Ventures |
| 16 | IAS 29 | Ind AS 29 | Financial Reporting in Hyperinflationary Economies |
| 17 | IAS 32 | Ind AS 32 | Financial Instruments: Presentation |
| 18 | IAS 33 | Ind AS 33 | Earnings per Share |
| 19 | IAS 34 | Ind AS 34 | Interim Financial Reporting |
| 20 | IAS 36 | Ind AS 36 | Impairment of Assets |
| 21 | IAS 37 | Ind AS 37 | Provisions, Contingent Liabilities and Contingent Assets |
| 22 | IAS 38 | Ind AS 38 | Intangible Assets |
| 23 | IAS 39 | IAS 39 contains only part relating to hedge accounting which is still valid globally as continuation of this part is permitted globally. But in India, only IFRS 9 hedge accounting is permitted, hence the part of IAS 39 is not relevant, and no equivalent standard exists | Financial Instruments: Recognition and Measurement |
| 24 | IAS 40 | Ind AS 40 | Investment Property |
| 25 | IAS 41 | Ind AS 41 | Agriculture |
| 26 | IFRS 1 | Ind AS 101 | First-time Adoption of Indian Accounting Standards |
| 27 | IFRS 2 | Ind AS 102 | Share-based Payment |
| 28 | IFRS 3 | Ind AS 103 | Business Combinations |
| 29 | IFRS 5 | Ind AS 105 | Non-current Assets Held for Sale and Discontinued Operations |
| 30 | IFRS 6 | Ind AS 106 | Exploration for and Evaluation of Mineral Resources |
| 31 | IFRS 7 | Ind AS 107 | Financial Instruments: Disclosures |
| 32 | IFRS 8 | Ind AS 108 | Operating Segments |
| 33 | IFRS 9 | Ind AS 109 | Financial Instruments |
| 34 | IFRS 10 | Ind AS 110 | Consolidated Financial Statements |
| 35 | IFRS 11 | Ind AS 111 | Joint Arrangements |
| 36 | IFRS 12 | Ind AS 112 | Disclosure of Interest in Other Entities |
| 37 | IFRS 13 | Ind AS 113 | Fair Value Measurement |
| 38 | IFRS 14 | Ind AS 114 | Regulatory Deferral Account |
| 39 | IFRS 15 | Ind AS 115 | Revenue from Contracts with Customers |
| 40 | IFRS 16 | Ind AS 116 | Leases |
| 41 | IFRS 17 | Ind AS 104 | Insurance Contracts (Internationally, IFRS 17 has replaced IFRS 4. However, in India, Ind AS 104 is continuing as Ind AS 117 is yet to be issued.) |
IFRICs/SICs included in the corresponding Appendices to Ind AS
As per the scheme of formulation of Indian Accounting Standards, the interpretations issued by the IASB, IFRIC and SIC be added as an appendix with the relevant Ind AS.
| S.No. | IFRIC/ SIC No. | Corresponding Appendix included in Ind AS | IFRIC/SIC |
|---|---|---|---|
| 1 | IFRIC 1 | Appendix A to Ind AS 16 | Changes in Existing Decommissioning, Restoration and Similar Liabilities |
| 2 | IFRIC 2 | Appendix corresponding to IFRIC 2 is not issued as it is not relevant for the companies. | Members’ Shares in Co-operative Entities and Similar Instruments |
| 3 | IFRIC 5 | Appendix A to Ind AS 37 | Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds |
| 4 | IFRIC 6 | Appendix B to Ind AS 37 | Liabilities arising from Participating in a Specific Market—Waste Electrical and Electronic Equipment |
| 5 | IFRIC 7 | Appendix A to Ind AS 29 | Applying the Restatement Approach under Ind AS 29 Financial Reporting in Hyperinflationary Economies |
| 6 | IFRIC 10 | Appendix A to Ind AS 34 | Interim Financial Reporting and Impairment |
| 7 | IFRIC 12 | Appendix D to Ind AS 115 | Service Concession Arrangements |
| 8 | IFRIC 14 | Appendix B to Ind AS 19 | Ind AS 19— The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction |
| 9 | IFRIC 16 | Appendix C to Ind AS 109 | Hedges of a Net Investment in a Foreign Operation |
| 10 | IFRIC 17 | Appendix A to Ind AS 10 | Distributions of Non-cash Assets to Owners |
| 11 | IFRIC 19 | Appendix D to Ind AS 109 | Extinguishing Financial Liabilities with Equity Instruments |
| 12 | IFRIC 20 | Appendix B to Ind AS 16 | Stripping Costs in the Production Phase of a Surface Mine |
| 13 | IFRIC 21 | Appendix C to Ind AS 37 | Levies |
| 14 | IFRIC 22 | Appendix B to Ind AS 21 | Foreign Currency Transactions and Advance Consideration |
| 15 | IFRIC 23 | Appendix C to Ind AS 12 | Uncertainty over Income Tax Treatments |
| 16 | SIC-7 | Appendix corresponding to SIC 7 is not issued as it is not relevant in the Indian context. | Introduction of the Euro |
| 17 | SIC-10 | Appendix A to Ind AS 20 | Government Assistance—No Specific Relation to Operating Activities |
| 18 | SIC-25 | Appendix A to Ind AS 12 | Income Taxes—Changes in the Tax Status of an Entity or its Shareholders |
| 19 | SIC-29 | Appendix E to Ind AS 115 | Service Concession Arrangements: Disclosures |
| 20 | SIC-32 | Appendix A to Ind AS 38 | Intangible Assets—Web Site Costs |