What is the meaning of IndAS?

By Research Desk
about 14 days ago
1

Indian Accounting and Financial reporting was not at par with the global standards, known as International Financial Reporting Standards (IFRS). Thus Government of India, with a view to match local accounting and financial reporting with the best practices in the world, introduced Indian Accounting Standards (Ind AS), which are on the lines of IFRS, from 1st April 2015. For the convenience of applicability, IndAS was made applicable in a phased manner.  

  • Phase 1 - Financial Reporting Year 2015-16: Ind AS was introduced and companies were allowed to follow it on a voluntary basis. Irrespective of listed, unlisted or net worth any company could opt for Ind AS and this was the phase one which set the path for the next phase.
  • Phase 2 - Financial Reporting Year 2016-17: Rule 4 of the Companies (Indian Accounting Standards) Rules 2015 made it mandatory for certain classes of companies to follow Ind AS-
    • Listed companies in India or a similar exchange outside India having Net Worth more than or equal to Rs.500 crores.
    • Companies in process of getting listed in India or outside India having Net Worth more than or equal to Rs.500 crores.
    • Any company having Net Worth more than or equal to Rs. 500 crores.
    • Holding, Subsidiary, Joint Venture or Associate Companies of any of the above.
  • Phase 3 - Financial Reporting Year 2017-18: Many other companies for which Ind AS was made mandatory from 1st April 2017 were:
    • All listed companies in India or any similar exchange outside India.
    • Companies in process of getting listed in India or outside India having Net Worth more than or equal to Rs. 250 crores.
    • Any other company having Net Worth of more than or equal to Rs. 250 crores.
    • Holding, Subsidiary, Joint Venture or Associate Companies of any of the above.

Various companies were given exemptions under Ind AS like Insurance Companies, Banking Companies and NBFCs vide notification dated 16-2-2015. However, certain classes of NBFCs were made mandatory to follow Ind AS through an amendment on 30-3-2016:

    • With effect from FY18-19 - NBFCs having Net Worth more than or equal to Rs. 500 crores and Holding, Subsidiary, Joint Venture or Associate Companies of any of such NBFCs.
    • With effect from FY19-20 - For all listed NBFCs having Net Worth less than 500 crores, unlisted NBFCs having a net worth of Rs. 250 crores and Holding, Subsidiary, Joint Venture or Associate Companies of any of the above.
    • Amendment also stated that the banking and insurance companies were to comply with Ind AS as notified by the RBI and IRDA respectively, which now stands at 1.4.2019 (FY19-20) and 1.4.2020 (FY20-21) respectively.

For classes of companies not covered in the above pointers, the same Accounting Standards will apply and thus Ind AS has not replaced the existing accounting standards completely. A gradual move towards the same is sought by the Government.

Foreign Investors find it satisfactory to review Indian companies which follow Ind AS and thus companies planning to take on foreign investments currently or in future are taking up the practice of Ind AS voluntarily too. Since Ind AS helps comparability with the global standards, its adoption has been welcomed by the industry.

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