Indian Accounting Standards: Applicability & List

Indian Accounting Standards (Ind AS) are a set of accounting principles developed by the Ministry of Corporate Affairs (MCA), converging Indian norms with the globally recognized International Financial Reporting Standards (IFRS). These standards provide a consistent framework for preparing and presenting financial statements, enhancing transparency, comparability, and accountability. Ind AS applies to specific classes of companies in India based on their listing status and financial thresholds. The aim is to make Indian companies globally competitive and improve the reliability of their financial reporting.

BOOK A FREE DEMO

Accounting

What Are Accounting Standards and Their Objectives?

Accounting standards are formal guidelines for accounting policies and procedures, offering a framework to record, report, and interpret financial data consistently. In India, these standards are notified by the MCA and developed by the Institute of Chartered Accountants of India (ICAI).

The key objectives include ensuring consistency in financial reporting, promoting transparency, facilitating comparability across companies and periods, and improving investor confidence. They also support statutory compliance by aligning financial reports with legal and regulatory requirements. For example, Ind AS 1 sets the presentation structure for financial statements, while Ind AS 2 covers inventory valuation.

As of the latest update, there are 40 Indian Accounting Standards (Ind AS) issued by the Ministry of Corporate Affairs. These standards are reviewed and revised regularly to stay aligned with the latest IFRS updates. They are categorized under different financial reporting themes such as presentation, measurement, disclosure, consolidation, financial instruments, etc.

Get a Free Trial – Best Accounting Software For Small Business

Importance and Significance of Accounting Standards

Financial accounting standards are crucial for maintaining the quality and credibility of financial reporting. They help:

Ensure comparability of financial statements across companies and time periods.
Provide clarity to stakeholders, including investors, regulators, and auditors.
Promote uniformity in financial practices, which is essential for corporate governance.
Reduce ambiguity and potential manipulation in reporting.
Enhance cross-border investment by aligning Indian standards with international norms.

Get a Free Demo – Best Billing and Invoicing Software

Applicability of Indian Accounting Standards (Ind AS)

Ind AS is applicable in phases, depending on a company’s net worth, listing status, and industry type. As per MCA’s roadmap:

Phase I: From April 1, 2016, mandatory for listed/unlisted companies with a net worth of > ₹500 crore.
Phase II: From April 1, 2017, mandatory for other listed companies and unlisted companies with a net worth between ₹250–₹500 crore.
Banks, Insurance Companies, and NBFCs: From April 1, 2018–2019, based on specific criteria.

Once Ind AS is applicable to a company, it must follow these standards for all future financial statements.

Indian Accounting Standards List

Here is a partial list of key Ind AS notified by the MCA:

Ind AS 1: Presentation of Financial Statements
Ind AS 2: Inventories
Ind AS 7: Statement of Cash Flows
Ind AS 10: Events after Reporting Period
Ind AS 12: Income Taxes
Ind AS 16: Property, Plant and Equipment
Ind AS 17: Leases (replaced by Ind AS 116)
Ind AS 18: Revenue (replaced by Ind AS 115)
Ind AS 19: Employee Benefits
Ind AS 21: Effects of Changes in Foreign Exchange Rates
Ind AS 33: Earnings Per Share
Ind AS 109: Financial Instruments
Ind AS 115: Revenue from Contracts with Customers

Indian vs. International Accounting Standards

Indian Accounting Standards are largely converged with International Financial Reporting Standards (IFRS) but with some modifications known as carve-outs. These modifications account for Indian economic conditions, regulatory requirements, and terminology. For instance:

IFRS uses the term “Statement of Financial Position” while Ind AS uses “Balance Sheet.”
Ind AS includes detailed guidance on fair value measurement tailored to Indian markets.

Despite these differences, Ind AS facilitates international comparability and financial credibility, essential for companies operating or seeking investments abroad.

Conclusion

Indian Accounting Standards (Ind AS) play a vital role in aligning domestic financial reporting with global practices, enhancing transparency, consistency, and investor trust. By converging with IFRS while adapting to India’s economic environment, Ind AS ensures that Indian companies remain competitive and credible on the world stage. Whether you’re a business owner, investor, or auditor, understanding the applicability and scope of these standards is key to accurate financial reporting and regulatory compliance in today’s evolving business landscape.

Hitesh Aggarwal

Chartered Accountant

MRN No.: 529770

City: Delhi

As a Chartered Accountant with over 12 years of experience, I am not only skilled in my profession but also passionate about writing. I specialize in producing insightful content on topics like GST, accounts payable, and income tax, confidently delivering valuable information that engages and informs my audience.

Frequently Asked Questions

Why are Indian Accounting Standards important?

Indian Accounting Standards (Ind AS) ensure transparency, consistency, and comparability in financial reporting. They align Indian companies with global practices and improve investor confidence. Ind AS also supports better decision-making by presenting true financial positions. BUSY complies with Indian accounting norms, helping businesses maintain accurate and standardized records.
Who is required to follow Ind AS in India?

Ind AS is mandatory for listed companies and large unlisted companies with a net worth of ₹250 crore or more. It’s also required for their holding, subsidiary, joint venture, or associate companies. Smaller businesses can continue using traditional accounting standards unless they voluntarily adopt Ind AS.
What is the difference between Ind AS and IFRS?

Ind AS is based on IFRS but adapted for Indian laws and conditions. While both follow similar principles, Ind AS includes additional disclosures and certain modifications. For example, treatment of MAT credit or investment properties may differ. Ind AS ensures global comparability while meeting local regulatory needs.
When did Ind AS become mandatory in India?

Ind AS became mandatory in phases starting from April 1, 2016. Initially applied to listed and large unlisted companies, it later extended to other eligible entities. The phased adoption helped companies gradually shift from Indian GAAP to globally aligned reporting under Ind AS.
What are some key Indian Accounting Standards?
Some key Ind AS include:
- Ind AS 1: Presentation of Financial Statements
- Ind AS 2: Valuation of Inventories
- Ind AS 16: Property, Plant, and Equipment
- Ind AS 115: Revenue from Contracts
These standards guide how businesses report financial data accurately and consistently.

View all FAQs