Ind AS · Applicability and transition
What changes when a company moves from Indian GAAP to Ind AS?
Short answer
The opening balance sheet is restated at the date of transition, the start of the comparative year, under Ind AS 101, with optional exemptions such as deemed cost for fixed assets. The numbers that most often change are revenue timing, leases coming on the balance sheet, expected credit loss and fair values, employee benefits, deferred tax and the new Other Comprehensive Income.
The timeline
If the first Ind AS financial statements are for the year ending 31 March 2028, the comparative year is 2026-27 and the date of transition is 1 April 2026. An opening Ind AS balance sheet is prepared as at that date, and both years are presented under Ind AS. So a company that crosses the threshold now may already be inside its transition period.
Opening balance sheet (Ind AS 101)
- Recognise all assets and liabilities Ind AS requires, and remove those it does not allow.
- Reclassify and remeasure items under Ind AS; take the differences to retained earnings (or another equity head).
- Use the optional exemptions where they help, for example deemed cost for property, plant and equipment (previous GAAP carrying amount or fair value), exemptions for past business combinations, and cumulative translation differences.
- Apply the mandatory exceptions, such as using estimates consistent with those made under the previous GAAP.
What usually changes
| Area | Under AS | Under Ind AS |
|---|---|---|
| Revenue | Risks and rewards | Five-step model and performance obligations (Ind AS 115): bundles, discounts, warranties, long contracts |
| Leases | Operating leases expensed | Right-of-use asset and lease liability for most leases (Ind AS 116) |
| Receivables | Provision for doubtful debts | Expected credit loss (Ind AS 109) |
| Investments and loans | Cost less diminution | Fair value or amortised cost with effective interest |
| Employee benefits | Actuarial gains in profit | Remeasurements in Other Comprehensive Income |
| Deferred tax | Income-statement approach | Balance-sheet approach |
| Group | Control largely by ownership | Control under Ind AS 110; more entities may be consolidated |
| Presentation | Schedule III Division I | Schedule III Division II, with Other Comprehensive Income |
Disclosures and the work involved
The first Ind AS statements must reconcile equity and total comprehensive income from the old GAAP to Ind AS. Plan for the systems data (lease schedules, ageing, fair values), the actuarial and valuation reports, the auditor's audit of opening balances, and board approval of accounting policies. Taxable income continues to be computed under the Income-tax Act and ICDS, so deferred tax must be worked out afresh.
See three questions before you move to Ind AS and the complete Ind AS guide.
Legal basis
- Ind AS 101, First-time Adoption of Indian Accounting Standards
- Companies (Indian Accounting Standards) Rules, 2015
- Schedule III, Division II, Companies Act, 2013 (presentation for Ind AS companies)
Official sources
Related questions
- Which companies must follow Ind AS?Ind AS is compulsory for companies whose equity or debt securities are listed, or are being listed, on a stock exchange in India or abroad (other than...
- What is expected credit loss under Ind AS 109, and how is it calculated for receivables?Ind AS 109 requires a loss allowance for credit losses expected in future, not only those already incurred. For trade receivables and contract assets,...
- How does a tenant account for a lease under Ind AS 116?A tenant (lessee) recognises almost every lease on the balance sheet: a lease liability at the present value of the unpaid lease payments, and a...