Companies (Indian Accounting Standard) Rules, 2015 notifies the Indian Accounting Standard applicable to Companies working in India or Registered in India. It specifies Year from which such accounting standard is applicable and type of Companies to which such accounting Standard are applicable. Indian Accounting Standard needs to be followed in Preparation of Financial  Statement and related disclosures.

Applicability of Indian Accounting Standards for Companies other than Banking Companies, Non-Banking Finance Companies (NBFCs) and Insurance Companies

Phase Financial Year Listed Co. or being in the process of listing Unlisted Co.
Phase I 2016-17 Net worth Rs. 500 crore* or more Net worth Rs. 500 crore* or more
Holding, subsidiary, joint venture or associate companies of above companies
Phase II 2017-18 Net worth less than Rs. 500 crore Net Worth Rs. 250 crore* or more
Holding, subsidiary, joint venture or associate companies of above companies

*as on 31st March, 2014 or the first audited financial statements for accounting period which ends after that date (i.e. March 31, 2014) in respect of which it meet threshold specified

Applicability of Indian Accounting Standards for Non-Banking Finance Companies (NBFCs)

Sr. No. Financial Year Listed Co. or being in the process of listing Unlisted Co.
1 2018-19 Net worth Rs. 500 crore* or more Net worth Rs. 500 crore* or more
Holding, subsidiary, joint venture or associate companies of above companies
2 2019-20 Net worth less than Rs. 500 crore Net Worth Rs. 250 crore* or more
Holding, subsidiary, joint venture or associate companies of above companies

*as on 31st March, 2014 or the first audited financial statements for accounting period which ends after that date (i.e. March 31, 2014) in respect of which it meet threshold specified

Applicability of Indian Accounting Standards (IND AS) For Banking & Insurance Companies

Banking Companies and Insurance Companies shall apply Ind AS as notified by the Reserve Bank of India (RBI) and Insurance Regulatory Development Authority of India (IRDAI) respectively. 

Banking Companies:

Ind AS were applicable on banking companies from April 01, 2018.

Reserve Bank of India (RBI) has deferred applicability of Ind AS on commercial banks (except regional rural banks) by one year.

Accordingly, Ind AS for Banking companies would be applicable from April 01, 2019 (instead of April 01, 2018).

Insurance Companies:

Ind AS were applicable on insurance companies from April 01, 2018.

Insurance Regulatory and Development Authority of India (IRDAI) deferred implementation of Ind AS in the insurance sector in India for a period of two years on June 28, 2017.

Accordingly, Ind AS for Indian insurance companies would be applicable from April 01, 2020 (instead of April 01, 2018).

However, insurance companies would still be required to submit the proforma Ind AS financial statements to IRDAI on a quarterly basis (effective from December 31, 2016).

Other Important Points:

1. Net worth calculation:

Net Worth = Paid-up share Capital + all reserves# out of profit & securities premium account –(accumulated losses + deferred expenditure + miscellaneous expenditure not written off)

#Reserves created out of revaluation of assets and written back depreciation shall not be included in net worth calculation.

2. Companies meeting specified thresholds given above for the first time shall apply Indian Accounting Standards (Ind AS) from immediate next accounting year. For example: Companies meeting threshold for the first time on March 31, 2017 shall apply Ind AS for the financial year 2017-18 onwards.

3. Overseas subsidiary, associate, joint venture and other similar entities of an Indian company may prepare its standalone financial statements in accordance with the requirements of specific jurisdiction. However, the Indian parent will have to mandatorily prepare its consolidated financial statements in accordance with the Ind AS if it meets the criteria specified above.

4. An Indian company which is a subsidiary, associate, joint venture and other similar entity of a foreign company should prepare its financial statements in accordance with Ind AS if it meets the criteria specified above.

Voluntary Applicability of Indian Accounting Standards (IND AS)

Company is allowed to follow Ind AS voluntarily (from accounting periods beginning on or after April 01, 2015). However, once a company opts to report financial statements as per the Ind AS, it will have to apply it consistently in future.

Disclaimer: The information contained in above is as per relevant act. Whilst every care has been taken in the preparation of this document, it may content inadvertent errors for which we shall not be held responsible. The information given in this document provides bird’s eye view on overall. As required to refer under each circumstances would call for specific reference of the relevant statutes, rules, notification and circulars etc.

Don’t forget to check ind as applicability.

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