Applicability of Indian Accounting Standards (Ind AS)

Determining the applicability of Indian Accounting Standards (Ind AS) can be complicated. This article simplifies the understanding of the applicability criteria.

Adoption of Indian Accounting Standards (Ind AS) reporting as of today is mandatory to:

• A listed company or a company that is in the process of being listed (Other than companies listed on the SME Exchanges).

• Unlisted Companies having a Net worth greater than or equal to Rs. 250 crore. (Net worth for a company is to be calculated in accordance with its stand-alone financial statements.)

• NBFC whose equity and/or debt securities are listed or are in process of listing on any stock exchange.

• NBFC that is unlisted having net worth between 250 crores.

• Holding, Subsidiary, Joint Venture, and Associate companies of above.

The overseas subsidiary, associate, joint venture and other similar entity (ies) of an Indian company may prepare its stand-alone financial statements in accordance with the requirements of the specific jurisdiction. However, for group reporting purposes, it will have to report to its Indian parent under Ind AS to enable its parent to present CFS in accordance with Ind AS.

A company may voluntarily adopt its financial statements in accordance with Ind AS. However, once adopted, it cannot be revoked.

Companies that are not covered under the eligibility criteria must continue to apply existing standards.

Calculation of Net Worth:

Net Worth is the total of Paid-up share Capital and all reserves out of profit & securities premium account, after deducting accumulated losses, deferred expenditure, and miscellaneous expenditure not written off. Capital Reserve only to the extent of Promoters Contribution and Government Grants received can be included. Reserves created out of revaluation of assets and written back depreciation to be excluded.

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