Applicability Of Indian Accounting Standards

Deepak Basist

MCA notifies Roadmap for applicability of Indian Accounting Standards

1. Any company may comply with the Indian Accounting Standards (hereinafter referred to as the “IndAS”) for financial statements for accounting periods beginning on or after 1stApril, 2015, with the comparatives for the periods ending on 31st March, 2015, or thereafter

Please note that, if you once adopted then you cannot turning back, the company can’t prepare the financial statements in accordance with Accounting Standards specified in Annexure to Companies (Accounting Standards) Rules, 2006 again. It will have to comply with IndAS only.

2. The following companies shall comply with the IndAS for the accounting periods beginning on or after 1st April, 2016, with the comparatives for the periods ending on 31st March, 2016, or thereafter, namely:-

a. companies whose equity or debt securities are listed or are in the process of being listed on any stock exchange in India or outside India and having net worth of rupees five hundred crore or more;

b. companies other than those covered by sub- rule (a) of rule 2 and having net worth of rupees five hundred crore or more;

c. holding, subsidiary, joint venture or associate companies of companies covered under sub-rule (a) of rule (2) and sub-rule (b) of rule (2).

3. The following companies shall comply with the Indian Accounting Standards (IndAS) for the accounting periods beginning on or after 1st April, 2017, with the comparatives for the periods ending on 31st March, 2017, or thereafter, namely:-

a. companies whose equity or debt securities are listed or are in the process of being listed on any stock exchange in India or outside India and having net worth of less than rupees five hundred crore;

b. companies other than those covered in sub- rule (a) of rule (2) and sub-rule (a) (3), that is, unlisted companies having net worth of rupees two hundred and fifty crore or more but less than rupees five hundred crore.

c. holding, subsidiary, joint venture or associate companies of companies covered under sub-rule (a) of rule (3) and sub-rule (b) of rule (3).

For the purposes of calculation of net worth of companies under rule (2) and rule (3), the following principles shall apply, namely:-

The net worth shall be calculated in accordance with the stand-alone financial statements of the company as on 31st March, 2014 or the first audited financial statements for accounting period which ends after that date

Net Worth

Paid Up Share Capital + All reserves created out of Profits + Security Premium – Accumulated Losses – Deferred Expenditure – Misc. Expenses Not written off.

(However, It doesn’t include Reserves created out of

• Revaluation of Assets,
• Write Back of Depreciation, and
• Amalgamation)

Non-applicability:

The following rules are not applicable on the following companies-

1. Insurance Companies
2. Banking Companies
3. Non Banking Finance Companies

For the rest of companies, no official announcement has been made so far, however, Any company can voluntarily adopt the Ind(AS) as a good corporate practice

For better clarification please refer below table:

(Author can be reached at deepakbasist03@gmail.com)