Accounting standards are essential guidelines set by regulatory bodies to ensure consistency and transparency in financial reporting. Indian Accounting Standards (Ind AS) align with international norms, specifically the IFRS, to enhance the accuracy and comparability of financial statements. Developed by the Ministry of Corporate Affairs (MCA), Ind AS applies in phases based on company size and net worth, ensuring businesses adopt globally accepted practices while considering Indian regulatory requirements.

What are accounting standards?

Accounting standards are the guidelines issued by certified accounting bodies or by the government or other regulatory agency dealing with the aspects of identification, evaluation, management, presentation, and declaration of accounting transactions in financial statements.

What are Indian Accounting Standards (Ind AS)?

Indian Accounting Standards (Ind AS) are the standards that are used by certain Indian companies that provide assurance regarding the alignment of financial statements with international standards. Ind AS are merged with International Financial Reporting Standards (IFRS) by the Central Government of India. These standards are formed with the assistance and guidance of the Accounting Standards Board (ASB) of the Institute of Chartered Accountants of India (ICAI) and also by the guidance of the National Financial Authority (NFRA). ASB was formed in 1977, and it manages the formulation as well as the applicability of Ind AS, making them the main accounting guidelines that Indian businesses use.

List of Indian Accounting Standards (Ind AS List)

We have included the main set of Indian Accounting Standards in the table.

 

Indian Accounting Standards

Description

Ind AS 1

Representations of Financial Statements

Ind AS 2

Inventories

Ind AS 7

Statement of Cash Flows

Ind AS 8

Accounting Policies, Alterations in Accounting Estimates, and Errors.

Ind AS 10

Events occurring 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 allowances

Ind AS 20

Accounting related to government grants and reporting of government facilitation

 

Ind AS 21

The Impacts of alterations in Foreign Exchange Rates

Ind AS 23

Borrowing Costs

Ind AS 24

Related Party Disclosures

Ind AS 27

Splitting of Financial Statements

Ind AS 28

Investments in Associates and Joint Ventures

Ind AS 29

Financial Reporting in Extreme inflationary 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 and Discontinued Operations Held for Sale

Ind AS 106

Investigating and Assessing 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

An extensive summary of the applicability of Indian Accounting Standards (IND AS) is provided below:

Phase-Wise Adoption of IND AS:

To bring Indian Accounting Standards (IND AS) closer to the current accounting standards, the Ministry of Corporate Affairs (MCA) has adopted a phased approach. Businesses of all sizes and complexity levels may move smoothly thanks to this staged adoption.

Phase I (Effective from 1st April 2016)

  • Mandatory for: Firms, both listed and unlisted, having a net value of at least ₹500 crore (as determined for the fiscal years 2013–14, 2014–15, and 2015–16).

Phase II (Effective from 1st April 2017)

  • Mandatory for: Companies with a net value of between ₹250 crore and ₹500 crore (estimated for the fiscal years 2013–14, 2014–15, 2015–16, and 2016–17) that are listed or in the process of listing (as of March 31, 2016).

Phase III (Effective from 1st April 2018)

  • Mandatory for: Banks, insurance firms, and non-banking financial businesses (NBFCs) with a net value of at least ₹500 crore (as determined for the fiscal years 2015–16, 2016–17, and 2017–18).

Note: A distinct set of IND AS for banks and insurance businesses will be announced by the Insurance Regulatory and Development Authority of India (IRDA).

Phase IV (Effective from 1st April 2019)

  • Mandatory for: NBFCs between ₹250 crore and ₹500 crore in net value (estimated for the fiscal years 2015–16, 2016–17, and 2017–18).

Important Note:

  • Regardless of their net worth, a company’s subsidiaries, holding companies, affiliated firms, and joint ventures must all implement IND AS if it becomes subject to it.
  • For standalone financial accounts, Indian firms operating abroad may still employ their jurisdictional accounting rules. For consolidated financial reporting, these businesses must, nevertheless, provide their Indian parent firm with IND AS-adjusted statistics.

Voluntary Adoption of IND AS:

For their financial reporting periods starting on or after April 1, 2015, companies have the option to voluntarily adopt Ind AS. A company that chooses to voluntarily adopt Ind AS must also provide a comparative report for the periods ending March 31, 2015, or later, in order to clearly compare the new and old accounting standards. However, a business cannot go back to the old accounting rules after it has switched to Ind AS.

Difference between Ind AS and IFRS

Some of the key distinctions between IND AS and IFRS are listed below.

Characteristic

IFRS

IND AS

Definition

Internationally accepted accounting norms.

 

IFRS adaptation in India.

 

Created by

International Accounting Standards Board (IASB).

Ministry of Corporate Affairs (MCA), India.

Enforced by

144 nations worldwide.

Only used in India.

 

Declaration

Companies are required to declare their adherence to IFRS.

 

No such obligation to disclose.

 

Elements of Financial Statement

Statement of financial position. Statement of profit and loss Statement of changes in equity Statement of cash flows

Balance Sheet

Profit and loss account

Cash flow statement

Statement of changes in equity

Notes to financial statements Disclosure of accounting policies

Format of Balance Sheet

Particular rules for both current and non-current categorization.

 

There are presenting rules but no particular format constraints.

 

 
Questions to Understand your Ability

Q1.) What’s the primary reason for adopting Indian Accounting Standards (Ind AS)?

A) To provide clear financial statements for investors
B) To make financial statements match international standards
C) To help companies pay less tax
D) To outline company ownership rules

Q2.) Who’s in charge of creating and applying Ind AS?

A) ICAI (Institute of Chartered Accountants of India)
B) Ministry of Corporate Affairs (MCA)
C) National Financial Authority (NFRA)
D) Accounting Standards Board (ASB)

Q3.) How does India roll out Ind AS?

A) Based on the size of the company’s team
B) According to the company’s net worth
C) Based on the company’s market share
D) Based on a company’s revenue growth

Q4.) Who’s required to adopt Ind AS as of 1st April 2019?

A) Every listed company in India
B) Companies with net worth between ₹250 crore and ₹500 crore
C) Only multinational companies
D) Companies with net worth below ₹250 crore

Q5.) What’s the big difference between Ind AS and IFRS?

A) Ind AS is mandatory everywhere, while IFRS is optional
B) Ind AS is only for India, while IFRS is used globally
C) Ind AS is created by the IASB (International Accounting Standards Board)
D) Ind AS is optional, but IFRS forces companies to follow it

Conclusion

Indian Accounting Standards (Ind AS) align financial reporting with international norms, ensuring consistency and transparency. Developed by the Ministry of Corporate Affairs (MCA) and based on IFRS, these standards apply to companies based on their net worth and are implemented in phases. While Ind AS adopts global principles, it also considers Indian regulations, ensuring that businesses comply with both international and national financial reporting requirements, enhancing reliability and comparability of financial statements.

FAQ's

Accounting standards are guidelines that govern the management, presentation, and declaration of financial transactions in statements, issued by recognized bodies or authorities.

Ind AS ensures that financial statements of Indian companies align with global standards like IFRS, offering transparency and consistency in financial reporting.

In India, the Ministry of Corporate Affairs (MCA) develops Ind AS with assistance from the National Financial Reporting Authority (NFRA) and the Accounting Standards Board (ASB).

There are 32 major Indian Accounting Standards (Ind AS), covering areas like revenue, financial instruments, employee benefits, and more.

Ind AS is adopted in phases starting from 1st April 2016, based on the company’s net worth, with different timelines for various types of businesses.

Yes, companies can voluntarily adopt Ind AS from 1st April 2015, but they must also provide comparative reports for clarity.

Ind AS is India’s version of IFRS, tailored for Indian companies, whereas IFRS is a global standard followed in 144 countries.

Yes, if a parent company adopts Ind AS, its subsidiaries, joint ventures, and affiliates must also comply with Ind AS, even if they’re abroad.