Understanding Indian Accounting Standards

Indian Accounting Standards are set of guidelines that are adopted by Indian companies. These standards are issued under the supervision of the Accounting Standards Board (ASB). This committee is constituted under the Institute of Chartered Accountants of India.

Let us learn about Indian Accounting Standards in detail.

• What is Indian Accounting Standard?
• List of Indian Accounting Standards (Ind AS)

About Indian Accounting Standards (Ind AS)

As per section 13 of the Companies Act 2013, Indian Accounting standards have been formulated as per the Indian economic and legal environment. The aim is to adapt to IFRS standards and to bring India’s financial reporting framework in line with international standards. 

Although Accounting Standard Board planned to import Ind AS in 2011, due to certain tax issues its implementation was postponed for the year 2015-16. As per the speech given by then finance minister Arun Jaitley:

As per the notification, the implementation of Ind AS was as mentioned below:

Time Period	Types of Organizations Covered
1st April 2015	For all companies on a voluntary basis
1st April 2016	Mandatory for Listed companies (Networth 500 crore and above) Unlisted companies (Networth 500 crore and above) Joint ventures, parent, subsidiary and associates
2017-2018	For Insurance Companies, NBFCs and Commercial Banks (was later deferred to FY 2020-21)
2018-2019	NBFCs with a net-worth 500 crores or more
2019-2020	NBFCs (every listed NBFC not covered in Phase 3)Unlisted NBFCs with a net-worth between 250 and 500 crores
2020-21	Insurance Companies
TBA	All Scheduled Banks (Excluding UCB and RRB)

Click here for detailed information on Indian Accounting Standards 

List of Indian Accounting Standards (Ind AS)

Standard	Description
Ind AS 101	First-time Adoption of IAS
Ind AS 102	Share-based Payment
Ind AS 103	Business Combinations
Ind AS 104	Insurance Contracts
Ind AS 105	Non-current assets Held for Sale and Discontinued Operations
Ind AS 106	Exploration for and Evaluation of Mineral Resources
Ind AS 107	Financial Instruments Disclosures
Ind AS 108	Operating Segments
Ind AS 109	Financial Instruments
Ind AS 110	Consolidated Financial Statements
Ind AS 111	Joint Arrangements
Ind AS 112	Disclosure of Interests in Other Entities
Ind AS 113	Fair Value Measurement
Ind AS 114	Regulatory Deferral Accounts
Ind AS 115	Revenue from Contracts with Customers
Ind AS 116	Leases
Ind AS 1	Presentation of Financial Statements
Ind AS 2	Inventories
Ind AS 7	Statement of Cash Flows
Ind AS 8	Accounting Policies Changes in Accounting Estimates and Errors
Ind AS 10	Events after the reporting period
Ind AS 12	Income Taxes
Ind AS 16	Property, Plant and Equipment
Ind AS 19	Employee Benefits
Ind AS 20	Accounting for Government Grants and Disclosure of Government Assistance
Ind AS 21	The Effects of Changes in Foreign Exchange Rates
Ind AS 23	Borrowing Costs
Ind AS 24	Related Party Disclosures
Ind AS 27	Separate Financial Statements
Ind AS 28	Investments in Associates and Joint Ventures
Ind AS 29	Financial Reporting in Hyperinflationary Economies
Ind AS 32	Financial Instruments Presentation
Ind AS 33	Earnings per Share
Ind AS 34	Interim Financial Reporting
Ind AS 36	Impairment of Assets
Ind AS 37	Provisions, Contingent Liabilities and Contingents Assets
Ind AS 38	Intangible Assets
Ind AS 40	Investment Property
Ind AS 41	Agriculture

1. Ind AS 1: Presentation of Financial Statements

• This Indian Accounting Standard is meant for presenting general-purpose financial statements. 
• It ensures that your financial statement is compatible with the financial statements of previous periods of the entity and the financial statements of other entities.  
• As per this standard of Indian accounting, entities need to provide a set of financial statements at least once a year with a comparison of the preceding year.
• This includes a balance sheet, profit and loss statement, cash flows statement and statement of changes in equity for the period. 

2. Ind AS 2: Inventories

• This accounting standard is meant for inventories including cost determination and its recognition as expense. 
• Except for financial instruments, Ind AS 2 is applicable for every inventory. 
• This is an important standard of accounting since inventories form a major portion of the current assets of an entity. 
• As per this standard, inventories must be measured at a lower cost and at net realisable value. 
• Here, the cost of inventories include costs of conversion, purchase and other cost incurred in bringing inventories to the present location. 

Why there are many missing serial-wise Indian Accounting standards?

Indian Accounting Standards (Ind AS) are numbered according to IFRS. Do remember that not every IFRS standard was adopted as Ind AS due to several reasons including the catering to specific requirements and complexities of the Indian market. 

3. Ind AS 7: Statement of Cash Flows

• This standard of accounting presents principles and guidance on the preparation and presentation of cash flows. 
• It is applicable to an entity that operates, invests and finances activities for a reporting period. 
• Indian Accounting Standard 7 provides information related to changes in cash and cash equivalent during the reporting period from operating, investing and financing activities.   
• As per Ind AS 7, the Information about the cash flows of an entity is useful for those assessing financial statements. It allows users to assess how an entity is able to generate cash and cash equivalent as well as the requirement of the entity to utilize those cash flows. 

 4. Ind AS 8: Accounting Policies, Changes in Accounting Estimates and Errors

• Indian Accounting Standard 8 is meant for specifying criteria to select and change accounting policies. 
• Ind AS 8 also specifies accounting treatment and disclosure of changes in accounting policies, corrections of errors and changes in accounting estimates.
• It enhances the relevance and reliability of the financial statements of an entity as well as the comparability of the financial statements over time and with other entities.
• It is applicable to an entity that operates, invests and finances activities for a reporting period.
• It enhances the relevance and reliability of the financial statements of an entity as well as the comparability of the financial statements over time and with other entities.

5. Ind AS 101 – First-time Adoption of IAS

• It provides exemptions and exceptions for first-time adopters, such as allowing the use of fair values for some assets and liabilities based on specific circumstances.
• Ind AS 101 requires retrospective application of Ind AS for most items, but there are exceptions for certain areas like estimates.
• Entities must provide reconciliations between their previous GAAP and Ind AS for both profit or loss and equity.

6. Ind AS 102 – Share-based Payment

• The standard distinguishes between equity-settled and cash-settled share-based payment transactions, each with different accounting treatments.
• It requires the recognition of a share-based payment expense over the vesting period, with adjustments for changes in fair value.
• Ind AS 102 provides guidance on how to account for modifications, cancellations, and settlements of share-based payment arrangements.

7. Ind AS 103 – Business Combinations

• The standard requires the identification of the acquirer in a business combination and the measurement of assets and liabilities at fair values at acquisition date.
• It includes guidance on the treatment of contingent consideration and the recognition of goodwill.
• Ind AS 103 provides requirements for the disclosure of information about business combinations in financial statements.

8. Ind AS 104 – Insurance Contracts:

• The standard categorizes insurance contracts into two main groups: liability for remaining coverage and liability for incurred claims.
• It outlines the measurement of insurance contract liabilities and requires an assessment of the probability and timing of cash flows.
• Ind AS 104 includes specific disclosures related to insurance contracts, including risk exposure and sensitivity analysis.

9. Ind AS 105 – Non-current Assets Held for Sale and Discontinued Operations

• It defines the criteria for classifying assets as held for sale and the presentation of discontinued operations in financial statements.
• Ind AS 105 mandates the disclosure of information about major classes of non-current assets held for sale and discontinued operations.
• There are specific guidelines for the presentation of discontinued operations in the income statement.

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