MCA has notified a phase-wise convergence to IND AS from current accounting standards. IND AS shall be adopted by specific classes of companies based on their Net worth and listing status. Let's see each of the phases in detail below:
Mandatory applicability of IND AS to all companies from 1st April 2016, provided:
*Net worth shall be checked for the previous three Financial Years (2013-14, 2014-15, and 2015-16).
Mandatory applicability of IND AS to all companies from 1st April 2017, provided:
Net worth shall be checked for the previous four Financial Years (2014-14, 2014-15, 2015-16, and 2016-17)
Mandatory applicability of IND AS to all Banks, NBFCs, and Insurance companies from 1st April 2018, whose:
IRDA (Insurance Regulatory and Development Authority) of India shall notify the separate set of IND AS for Banks & Insurance Companies with effect from 1st April 2018. NBFCs include core investment companies, stockbrokers, venture capitalists, etc. Net Worth shall be checked for the past 3 financial years (2015-16, 2016-17, and 2017-18)
All NBFCs whose Net worth is more than or equal to INR 250 crore but less than INR 500 crore shall have IND AS mandatorily applicable to them with effect from 1st April 2019.
The following are the objectives of utilising Indian Accounting Standards:
There are few key factors which have to be taken into consideration for adopting the above standards by Indian Companies:
Net worth shall have the same meaning as defined under section 2(57) of the Companies Act, 2013.
Net worth = (Total paid-up share capital + reserves out of profit + securities premium account) - (accumulated losses + expenditure + miscellaneous expenditures which are written off).
Net worth shall be calculated from the first audited financial statement.
Non-Banking Financial Companies (NBFC)
PHASE-I: From 1 st April,2018 (with comparatives)
PHASE-II: From 1 st April,2019 (with comparatives)
Applicable from 01/04/2018
* However, RBI has deferred the implementation of IND AS on commercial banks (except RRBs) by one year i.e. IND AS would be applicable from 01/04/2019
Applicable from 01/04/2018
* However, IRDA has deferred the implementation of IND AS in the insurance sector in INDIA by two years i.e. IND AS would be applicable from 01/04/2020
Types of Companies/entities
Threshold Limit of Net worth
Applicable from
Present Status as on 01/04/19
Remarks
Listed Co/ Co in process of Listing
Applicable for all listed companies and companies in process of listing
Applicable for all whose networth > 250 cr
Co listed in SME
Not to apply IND AS
Applicable for all
Applicable for all
Not to apply IND AS
Rural Regional Bank
Not to apply IND AS
Applicable for all listed NBFC
Applicable for all whose net worth > 250 cr
(a) Ind AS 116 | Leases- The amendments extend the advantages of the COVID nineteen connected rent concession that were introduced last year (which allowed lessees to acknowledge COVID nineteen connected rent concessions as financial gain instead of as lease modification) from thirty June 2021 to thirty June 2022.
(b) Ind AS 109 | Financial Instruments - The change provides a sensible expedient for assessment of written agreement income check, that is one amongst the factors for being eligible to live a monetary quality at amortized value, for the changes within the monetary assets that will arise as a results of rate Benchmark Reform on. a further temporary exception from applying hedge accounting is additionally other for rate Benchmark Reform.
(c) Ind AS 101 | Presentation of Financial Statements - The change substitutes the item (d) mentioned in paragraph bismuth as 'Classification and activity of monetary instruments'. The term 'financial asset' has been replaced with 'financial instruments'.
(d) Ind AS 102 | Share-Based Payment - The amendments to the current commonplace ar created in relevancy the abstract Framework of monetary news beneath Ind AS in terms of process the term 'Equity Instrument' that shall be applicable for the annual news periods starting on or once 1 Gregorian calendar month 2021.
(e) Ind AS 103 | Business Combinations - The change substitutes the definition of 'assets' and 'liabilities' in accordance with the definition given within the framework for the Preparation and Presentation of monetary Statements in accordance with Ind AS for qualifying the popularity criteria as per acquisition technique.
(f) Ind AS 104 | Insurance Contracts - The change covers the insertion of sure paragraphs within the commonplace so as to take care of consistency with IFRS four and conjointly incorporates the steerage on accounting treatment for amendments thanks to rate Benchmark Reform.
(g) Ind AS 105 | Non-current assets held for sale and discontinued operations - The change substitutes the definition of ― “fair worth less prices to sell” with “fair worth less prices of disposal”
(h) Ind AS 106 | Exploration for and evaluation of mineral resources - The change has been created in relevancy the abstract Framework for monetary news beneath Indian Accounting Standards in respect of expenditures that shall not be recognized as exploration and analysis assets.
(i) Ind AS 107 | Financial Instruments: Recognition, Presentation and Disclosure - The change clarifies the sure further disclosures to be created on account of rate Benchmark Reform like
(i) the character and extent of risks to that the entity is exposed arising from monetary instruments subject to rate benchmark reform;
(ii) the entity's progress in finishing the transition to various benchmark rates, and the way the entity is managing the transition.
(j) Ind AS | 111 Joint Arrangements - so as to take care of consistency with the amendments created in Ind AS 103, various changes are created in Ind AS 111.
(k) Ind AS 114 | Regulatory Deferral Accounts - The change clarifies that AN entity could solely amendment its accounting policies for the popularity, activity, and impairment & derecognition of regulative deferral account balances if the amendment makes the monetary statements additional relevant to the economic decision-making wants of users and no less reliable.
(l) Ind AS 115 | Revenue from Contracts with Customers - sure amendments are created so as to take care of consistency with range of paragraphs of IFRS fifteen.
(m) Ind AS 8 | Accounting Policies, Changes in Accounting Estimates and Errors - so as to take care of consistency with the amendments created in Ind AS 114 and to substitute the word 'Framework' with the 'Conceptual Framework of monetary news in Ind AS', various changes are created within the commonplace.
(n) Ind AS 16 | Property, Plant and Equipment - The change has been created by work the words “Recoverable quantity is that the higher of AN asset's honest worth less prices to sell and its worth in use” with “Recoverable quantity is that the higher of an asset's honest worth less prices of disposal and its worth in use”.
(o) Ind AS 34 | Interim Financial Reporting - The amendments to the current commonplace ar created in relevancy the abstract framework of monetary news in Ind AS.
(p) Ind AS 37 | Provisions, Contingent Liabilities and Contingent Assets - The change substitutes the definition of the term 'Liability' as provided within the abstract Framework for monetary news beneath Indian Accounting Standards.
(q) Ind AS 38 | Intangible Assets - The change substitutes the definition of the term 'Asset' as provided within the abstract Framework for monetary news beneath Indian Accounting Standards.
Ind AS 101 requires the entity to do the following in the opening Ind AS statement of financial position that it prepares as a starting point for its accounting under Ind AS:
This standard grant exemption (either mandatory or as an option) from the Ind AS requirements in specified areas where the cost of complying with them would be likely to exceed the benefits to users of financial statements. An entity shall not apply these exemptions by analogy to other items.
This Ind AS does not provide exemptions from the presentation and disclosure requirements in other Ind ASs.
This Ind AS prohibits retrospective application of some aspects of other Ind AS.
Disclaimer: The Article is based on the Relevant Provisions and as per the information existing at the time of the preparation. In no event I shall be liable for any direct and indirect result from this Article. This is only a knowledge sharing initiative.
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