Does Ind AS apply to your company?

Indian Accounting Standards (Ind AS) are converged with IFRS and are prescribed by the Companies (Indian Accounting Standards) Rules, 2015. Companies that are not covered continue to follow the Accounting Standards (AS) notified under the Companies (Accounting Standards) Rules, 2021.

Who must follow Ind AS

For companies other than banks, insurers and NBFCs, Ind AS is mandatory for:

• companies whose equity or debt securities are listed, or in the process of being listed, on a stock exchange in India or outside India (other than SME exchanges);
• unlisted companies with a net worth of ₹250 crore or more; and
• the holding, subsidiary, joint-venture and associate companies of any of the above.

NBFCs have a separate roadmap: those with a net worth of ₹250 crore or more, and listed NBFCs, follow Ind AS. Banks and insurers follow the timelines set by the RBI and IRDAI.

How net worth is measured

Net worth is computed under section 2(57) of the Companies Act, 2013, on the standalone financial statements. Once a company crosses the threshold at the end of any year, Ind AS applies from the following year, with comparatives.

Points that are often missed

• Once Ind AS applies, it applies for good. A company does not go back to AS if its net worth later falls below the threshold.
• Group companies are pulled in. A small subsidiary of a company that follows Ind AS must also follow Ind AS, even if it is well below the threshold on its own.
• Companies listed on an SME exchange are not required to follow Ind AS.
• Voluntary adoption is allowed, but it cannot be reversed.

What to do

Check your own net worth, and your group's, at each year end. If you are close to the threshold, plan the transition a year early: the Ind AS applicability checker gives a quick first view, and three questions before you move to Ind AS sets out the planning steps.