Roadmap for application of IFRS converged standards in India released, notification to follow "shortly"
05 Jan 2015
The Indian Ministry of Corporate Affairs (MCA) has released a revised road map for the adoption of Indian Accounting Standards (Ind AS), which are largely converged with International Financial Reporting Standards (IFRSs). The roadmap will become effective once the notification has been issued.
India originally intended to converge with IFRSs in a phased approach beginning in 2011, but transition to Ind AS was postponed. In April 2014, the Institute of Chartered Accountants of India (ICAI) publicly released a summary of its recommendations to the MCA on the timetable for the adoption of Ind AS, which proposed that listed and large entities should mandatorily apply Ind AS in consolidated financial statements for accounting periods beginning on or after 1 April 2016. This was picked up by the Indian Finance minister Arun Jaitley who said in his maiden budget speech in July 2014 that there was an urgent need to converge the current Indian accounting standards with IFRS.
The MCA has now released a revised roadmap that has been drawn up after "wide consultations with various stakeholders and regulators". In essence, companies with a net worth of Rs. 500 crore or more will have to mandatorily follow Ind AS from 1 April 2016. Corporates having a net worth of less than Rs. 500 crore but are listed, or in the process of getting listed, and companies with a net worth of Rs. 250 crore or more will have to follow the new norms from 1 April 2017. However, the new road map exempts banking, insurance and non-banking finance companies. The exact details for companies coming under the road map are quoted below from the MCA press release:
- On voluntary basis for financial statements for accounting periods beginning on or after April 1, 2015, with the comparatives for the periods ending 31st March, 2015 or thereafter;
- On mandatory basis for the accounting periods beginning on or after April 1, 2016, with comparatives for the periods ending 31st March, 2016, or thereafter, for the companies specified below:
- Companies whose equity and/or debt securities are listed or are in the process of listing on any stock exchange in India or outside India and having net worth of Rs. 500 Crore or more.
- Companies other than those covered in (2.) (a) above, having net worth of Rs. 500 Crore or more.
- Holding, subsidiary, joint venture or associate companies of companies covered under (2.) (a) and (2.) (b) above.
- On mandatory basis for the accounting periods beginning on or after April 1, 2017, with comparatives for the periods ending 31st March, 2017, or thereafter, for the companies specified below:
- Companies whose equity and/or debt securities are listed or are in the process of being listed on any stock exchange in India or outside India and having net worth of less than rupees 500 Crore.
- Companies other than those covered in paragraph (2.) and paragraph (3.)(a) above that is unlisted companies having net worth of rupees 250 crore or more but less than rupees 500 Crore.
- Holding, subsidiary, joint venture or associate companies of companies covered under paragraph (3.) (a) and (3.) (b) above.
- Once a company opts to follow the Indian Accounting Standards (Ind AS), it shall be required to follow the Ind AS for all the subsequent financial statements.
- Companies not covered by the above roadmap shall continue to apply existing Accounting Standards prescribed in Annexure to the Companies (Accounting Standards) Rules, 2006.
Please click for access to the full press release on the MCA website.
