Ind AS · Applicability and transition
Which companies must follow Ind AS?
Short answer
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 an SME exchange), for unlisted companies with a net worth of ₹250 crore or more, and for the holding, subsidiary, joint-venture and associate companies of any of them. NBFCs, banks and insurers have separate roadmaps. Once a company moves to Ind AS, it cannot go back.
The tests
| Company | Ind AS compulsory? |
|---|---|
| Equity or debt listed, or in the process of listing, in India or abroad | Yes |
| Listed only on an SME exchange | No (may adopt voluntarily) |
| Unlisted, net worth ₹250 crore or more | Yes |
| Holding, subsidiary, joint venture or associate of any company above | Yes, whatever its own size |
| NBFCs with net worth ₹250 crore or more, or listed | Yes, under the NBFC roadmap |
| Banks and insurers | As notified by the RBI and IRDAI (not yet for most) |
| Everyone else | No: they follow the Accounting Standards (AS) under the Companies (Accounting Standards) Rules, 2021 |
How net worth is measured
Net worth is computed under section 2(57) of the Companies Act: paid-up capital and reserves created out of profits and securities premium, less accumulated losses, deferred expenditure and miscellaneous expenditure not written off; revaluation reserves are excluded. It is tested on the standalone financial statements at the end of a year. Once a company crosses ₹250 crore, Ind AS applies from the following year, with comparatives restated.
Points often missed
- Once in, always in. A company does not return to AS if its net worth later falls below ₹250 crore or it delists.
- Group pull-in. A small subsidiary of an Ind AS company must also follow Ind AS. So must a company's holding company, even if unlisted and small.
- Voluntary adoption is allowed, but it is also irreversible.
- Overseas subsidiaries may follow local rules in their own accounts, but must report Ind AS figures for consolidation.
What to do
Test your net worth, and your group's, at every year end. If you are near the threshold, start planning a year early, because the comparative year is restated too: see moving from Indian GAAP to Ind AS. The Ind AS applicability checker gives a quick first view.
Legal basis
- Section 133, Companies Act, 2013
- Rule 4, Companies (Indian Accounting Standards) Rules, 2015
- Section 2(57), Companies Act, 2013 (net worth)
Official sources
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