Ind AS (Indian Accounting Standards) is mandatory for a broad spectrum of Indian companies as of 2025 for achieving convergence with global IFRS standards. These are overseen by the Ministry of Corporate Affairs (MCA) and aim to bring consistency, transparency, and comparability in financial reporting. The applicability is mainly dependent upon a company’s net worth, listed status, and industry (e.g., NBFCs, banks, insurance). Indian firms have to realize the IND AS and how it can be applied. Awareness about IND AS applicability helps the company follow regulations and steer clear of penalties. This article covers all the major points of IND AS, its parameters, voluntary and compulsory adoption, and the latest 2025 updates.
What is IND AS?
Ind AS, short for Indian Accounting Standards, is a set of accounting principles and guidelines notified by the Ministry of Corporate Affairs (MCA), Government of India, to converge Indian accounting practices with International Financial Reporting Standards (IFRS). These are the accounting and reporting standards that are being followed in India. These standards provide transparency, consistency, and comparability in financial statements.
Definition
Ind AS refers to a system of accounting standards in India that are converged with IFRS rather than fully adopting it. They provide a principle-based framework for preparing and presenting financial statements, ensuring greater transparency, comparability, and consistency in financial reporting.
Importance of IND AS
IND AS has proved very useful for Indian companies as it presents clear and accurate financial statements, creating trust in their investors, creditors, and regulators. The fact that IND AS establishes an atmosphere of trust and credibility makes it more consistent and reliable for Indian companies in preparing for competition and partnerships at the global level.
Concerns over Fair Value Accounting
Fair value measurement is specifically concentrated under IND AS. Actual values of assets and liabilities are measured more accurately. An internal dynamic view of the company’s annual financial situation is compared to an external static view of historical costs by the fair value accounting.
Greater Transparency
Financial transparency is a pillar on which investor awareness stands. IND AS provides the broadest range of disclosures that can be trusted in company accounts. This will ensure that stakeholders are aware of their investment and association decisions.
Global Comparability
IND AS gives Indian companies this comparability with international companies. This allows global investors to compare Indian companies with foreign ones easily. Thus, the dial-in comparability offers Indian companies the extra push toward foreign investment and consequent growth.
Harmonisation with IFRS
IND AS aligns Indian accounting with IFRS but remains mindful of Indian legal requirements. It strikes a balance between global and local needs. Harmonisation facilitates easier listing of Indian companies on foreign stock exchanges and acquisition of multinational clients.
Compulsory IND AS Application for Companies
The compulsory application of IND AS requires some companies to adopt these standards compulsorily. The government determines the rules of IND AS applicability based on criteria such as net worth and listing status. The rules provide that big companies make honest and consistent financial reports.
Listed Companies
All Indian or foreign exchange-listed companies have to adopt IND AS. It has nothing to do with their net worth. Being listed implies higher public accountability, thus the necessity of standardised reporting.
Unlisted Companies
Unlisted entities must implement Ind AS if their net worth exceeds Rs. 250 crore. This makes even major private players report honestly. It prevents loopholes through which major private firms might conceal financial risks without uniform codes.
Holding, Subsidiary, Joint Venture, or Associate Companies
If a parent company needs to adopt IND AS, its group companies, such as holdings, subsidiaries, or joint ventures, must follow. This group-wide application ensures consolidated financial reporting is accurate and consistent.
| Company Type | Net Worth (as on 31st March) | Applicability Year |
| Listed Companies | Any | Mandatory |
| Unlisted Companies | ≥250 crore | Mandatory |
| Holding/Subsidiary/Associate | Same as above | Mandatory |
Importance of Following Mandatory IND AS
Compulsory IND AS provides uniform financial reporting. It prevents manipulation of economic figures and safeguards the interests of investors. It also strengthens corporate governance and enhances the confidence of foreign investors.
Voluntary Adoption of IND AS
Some companies want to implement the IND AS in advance. The government allows voluntary adoption of Ind AS for such companies. However, they must follow strict regulations after opting for it. Early adoption will enable companies to prepare themselves more properly for global growth in the future. The Conditions for Voluntary Adoption are as follows:
Net Worth Condition
Any business, even those with a net worth of less than Rs. 250 crore, may opt for IND AS voluntarily. There is no limit for small businesses. Small businesses opting for IND AS reflect a commitment towards transparency and development.
Irreversible Decision
Once a firm begins to utilize IND AS, it cannot revert to earlier Indian GAAP levels. The adoption is irreversible. This provision makes the reporting consistent and prevents ambiguity in financial reports.
Full Application
Firms cannot choose and adopt selectively. They have to implement all the IND AS in all financial statements. Selective adoption would undermine the basis of standardization; thus, the all-or-nothing approach.
Board Approval Necessary
The board of directors of a company has to approve the decision for voluntary adoption formally. It reflects internal consensus and commitment. Board approval ensures that management and stakeholders are aware of the consequences.
Process of Voluntary Adoption
The Indian Accounting Standards (IND AS) represent a significant shift in the Indian accounting landscape, aligning Indian financial reporting more closely with the International Financial Reporting Standards (IFRS). While certain companies are mandated to adopt the IND AS based on their net worth and listing status, others can adopt it voluntarily. The process is listed below:
- Board Resolution: The company board formally resolves to implement IND AS from a given date. The resolution serves as the anchor document for initiating the new reporting format.
- Notifying Regulators: The decision to voluntarily implement IND AS has to be notified to the MCA, SEBI, and other regulators. Formal notification prevents future arguments regarding compliance.
- IND AS Financial Preparation: The company will prepare its accounting records under IND AS from the notified date onwards with immediate effect. They should prepare stringently to experience a seamless transition.
- Auditing under IND AS: Audits under IND AS norms should be certified and validated by auditors carefully to ascertain proper compliance. Validation of audits makes statements reliable.
Applicability of IND AS in Private and Unlisted Companies
Several private and unlisted firms have inquired about the applicability of IND AS to private firms and unlisted firms. Private companies also come under strict IND AS regulations when they expand in size. Rules for private and unlisted firms are as follows:
Net Worth Criterion
Based on last year’s financials, private or non-listed firms must embrace IND AS if their net worth exceeds Rs. 250 crore. Careful calculation of net worth using balance sheet figures is necessary. The net worth calculation is as follows:
- What Is Included: Paid-up share capital, retained earnings, securities premiums, and other reserves formed from profits are considered. These factors represent the financial prowess of a company accurately.
- What Is Excluded: Revaluation reserves, miscellaneous expenses, and reserves formed from amalgamations are excluded when determining net worth. These are excluded to avoid an artificial increase in net worth.
Group Companies Rule
Where the holding, subsidiary, joint venture, or associate of a private company is obligated to implement IND AS, the private company must also implement it. This maintains financial reporting consistent throughout the business group.
No Exemption for Being Private
There is no leniency for private companies merely because they are not listed. Net worth requirements apply across the board. Private ownership does not diminish the necessity of public accountability as companies become large.
Difference Between IND AS and Indian GAAP
Companies must understand the significant differences between IND AS and Indian GAAP while preparing financial statements. Even though both are used to present a company’s financial position, their treatment of accounting principles, valuation, and disclosures is quite different.
| Aspect | Indian GAAP | IND AS (Indian Accounting Standards) |
| Basis | Rule-based accounting standards | Principle-based accounting standards |
| Valuation Focus | Historical cost | Fair value accounting |
| Consolidation Requirements | Limited | Mandatory for group companies |
| Related Party Disclosures | Limited disclosures | Extensive and detailed disclosures |
| Financial Instruments | Basic disclosure requirements | Detailed measurement and classification |
| Revenue Recognition | Based on the completion of work | Based on the transfer of control and performance |
| Presentation of Financials | Different formats allowed | Prescribed formats must be followed |
| Alignment with IFRS | No direct alignment | High alignment with IFRS |
Consequences of Non-Compliance with IND AS
Non-compliance with the IND AS will have severe repercussions for companies bound by it. Both the Ministry of Corporate Affairs (MCA) and the Securities and Exchange Board of India (SEBI) keep watch over and ensure compliance strictly.
Penalties Imposed by MCA
If an entity does not adhere to obligatory IND AS requirements, the MCA can impose financial penalties under the Companies Act, 2013. The penalties can be Rs. 1 lakh to Rs. 25 lakh based on the seriousness of the default.
SEBI Actions for Listed Companies
The listed companies’ quarterly and annual results must be filed in the ND AS format. Failure to comply may attract penalties, suspension of trading, or delisting by SEBI. This erodes the reputation of the company and investor confidence.
Other Legal Consequences
Non-compliance with IND AS can result in auditor qualifications of reports, loss of the company’s goodwill, and failure to raise funds from international investors. Non-compliance can also lead to lawsuits by the shareholders or stakeholders who must make financial disclosures.
Significance of Timely Compliance
Adherence to IND AS prevents companies from incurring penalties and losing their reputation in the market. It assists them in attracting investment, obtaining credit without difficulty, and establishing strong business relationships within India and abroad.
Latest Updates on IND AS Applicability 2025
The Ministry of Corporate Affairs releases updates on IND AS annually. In 2025, some significant changes will have occurred. It is essential to stay updated with the IND AS applicability notification.
NBFCs Have to Fall in Line
NBFCs with a net worth of Rs. 250 crore and above are required to implement IND AS. Lesser NBFCs may stick to Indian GAAP. This step is intended to instill financial discipline within rapidly growing NBFCs.
Changes in Insurance Companies’ Disclosure
Insurance firms have to adhere to more stringent disclosure requirements. International insurance reporting standards are brought closer through the IND AS provisions. Policyholder protection is enhanced through this change.
LLPs’ Free Will Conversion
LLPs may voluntarily implement IND AS. Once they implement, they cannot do so in reverse; they must implement fully. Voluntary implementation enhances the image of LLPs with stakeholders.
Turnover Limit Unchanged
The Rs. 250 crore turnover threshold for IND AS mandatory implementation has remained unchanged. No loosening or strengthening is announced. Companies will need to keep reviewing their eligibility regularly.
Relevance to ACCA Syllabus
IND AS (Indian Accounting Standards) has primarily been influenced by IFRS, the backbone of ACCA’s Financial Reporting and Strategic Business Reporting syllabi. Familiarity with IND AS enables ACCA candidates to comprehend the worldwide financial reporting arena, allowing them to better analyze, interpret, and prepare consolidated financial statements in various jurisdictions.
IND AS Applicability ACCA Questions
Q1: Which firms are required to follow the IND AS in India?
A) All private companies
B) Listed companies and unlisted companies with a net worth above ₹250 crore
C) Only multinational corporations
D) Only companies listed outside India
Ans: B) Listed companies and unlisted companies with a net worth above ₹250 crore
Q2: IND AS converges with which set of international accounting standards?
A) US GAAP
B) IFRS
C) Canadian GAAP
D) Australian GAAP
Ans: B) IFRS
Q3: At what net worth level does an unlisted Indian company need to begin adhering to IND AS?
A) ₹100 crore
B) ₹150 crore
C) ₹250 crore
D) ₹500 crore
Ans: C) ₹250 crore
Q4: Which Indian regulator notified the applicability of IND AS?
A) ICAI
B) SEBI
C) MCA
D) RBI
Ans: C) MCA
Q5: Which accounting standard will regulate lease accounting under IND AS?
A) IND AS 16
B) IND AS 18
C) IND AS 116
D) IND AS 115
Ans: C) IND AS 116
Relevance to CMA Syllabus
The US CMA syllabus includes financial reporting, measurement, and recognition. As it is, IFRS-aligned IND AS gives a hands-on experience of global financial reporting standards. Knowledge of IND AS enables CMA aspirants to apply concepts such as revenue recognition, leases, and consolidation, which are heavily tested in Part 1 of the CMA exam.
IND AS Applicability CMA Questions
Q1: Which of the following best describes IND AS compliance in financial reporting?
A) It applies only to banks
B) It harmonizes Indian accounting with global IFRS norms
C) It follows pure US GAAP
D) It applies only to startups
Ans: B) It harmonizes Indian accounting with global IFRS norms
Q2: Revenue from contracts with customers is regulated under which IND AS?
A) IND AS 10
B) IND AS 115
C) IND AS 116
D) IND AS 12
Ans: B) IND AS 115
Q3: What is the core principle of IFRS and IND AS concerning the valuation of assets?
A) Historical Cost
B) Fair Value
C) Nominal Value
D) Book Value
Ans: B) Fair Value
Q4: Lease liabilities are accounted for in the balance sheet under which method in IND AS?
A) Operating lease model
B) Capital lease model
C) Single lessee accounting model
D) Deferred lease model
Ans: C) Single lessee accounting model
Q5: IND AS makes sure that financial statements are.
A) Confidential and private
B) Inconsistent over periods
C) Comparable, relevant, and understandable
D) Only Indian regulations focused
Ans: C) Comparable, relevant, and understandable
Relevance to CPA Syllabus
The US CPA exam rigorously evaluates knowledge of IFRS via the Financial Accounting and Reporting (FAR) section. Familiarity with IND AS enables CPA candidates to connect to international practices and sets them up for international accounting work where IFRS and US GAAP convergence is paramount.
IND AS Applicability CPA Questions
Q1: Which of the following accurately states IND AS?
A) Exact copy of US GAAP
B) Indian adaptation of IFRS
C) Envisioned with outside references
D) Internal standards alone for NGOs
Ans: B) Indian version of IFRS
Q2: For compliance under IND AS, what is the primary emphasis on measurement?
A) Fair Value
B) Cost Price
C) Selling Price
D) Historical Value
Ans: A) Fair Value
Q3: Who regulates the standards and issues amendments under IND AS in India?
A) Securities Exchange Board of India
B) Ministry of Corporate Affairs
C) Income Tax Department
D) Reserve Bank of India
Ans: B) Ministry of Corporate Affairs
Q4: What is the standard number for Income Taxes in IND AS?
A) IND AS 10
B) IND AS 12
C) IND AS 2
D) IND AS 37
Ans: B) IND AS 12
Q5: IND AS ensures the adoption of which of the following?
A) Local accounting variations
B) Consistent and comparable global financial practices
C) Only traditional Indian accounting
D) Outdated financial systems
Ans: B) Uniform and similar global financial practices
Relevance to CFA Syllabus
The CFA syllabus is interested in learning about global financial statements, analysis, and valuation. Knowing how IND AS applies to IFRS benefits CFA candidates in analyzing financials across markets, particularly emerging economies such as India.
IND AS Applicability CFA Questions
Q1: The implementation of IND AS aims to resolve which of the following?
A) Tailor accounting only for small companies
B) Bring Indian companies’ financials in line with international standards
C) Restrict global investments
D) Reduce transparency in reporting
Ans: B) Bring Indian companies’ financials in line with international standards
Q2: Under IND AS, which method is commonly employed for measuring financial assets?
A) Historical Cost
B) Fair Value
C) Salvage Value
D) Net Book Value
Ans: B) Fair Value
Q3: IND AS reporting primarily benefits investors. Which of the following benefits investors?
A) Providing less information
B) Providing uniform and comparable reports
C) Concentrating only on the home country expansion
D) Concealing contingent liabilities
Ans: B) Providing uniform and comparable reports
Q4: Where in the CFA syllabus is an understanding of standards such as IND AS most useful?
A) Portfolio Management
B) Financial Reporting and Analysis
C) Derivatives
D) Ethics
Ans: B) Financial Reporting and Analysis
Q5: Does IND AS have a principle-based philosophy similar to the following?
A) US GAAP
B) Indian Income Tax Act
C) IFRS
D) German HGB standards
Ans: C) IFRS
