Applicability of Indian Accounting Standards (Ind AS): The Corporate Roadmap

Overview of Indian Accounting Standards Applicability

Indian Accounting Standards (Ind AS) India’s accounting framework converged with IFRS apply to companies in a phased manner determined by net worth and listing status, under a roadmap notified by the Ministry of Corporate Affairs (MCA) via the Companies (Indian Accounting Standards) Rules, 2015. This roadmap covers companies generally; banks, NBFCs, and insurers follow separate roadmaps set by their own regulators, discussed further below. If you’re trying to determine whether your company is required to report under Ind AS, the threshold tests are net worth (calculated on a standalone, audited basis) and whether the company’s securities are listed or in the process of being listed.

Phase I: Mandatory from FY 2016-17

Ind AS became mandatory from accounting periods beginning 1st April 2016 for all listed companies (or companies in the process of listing, as on 31st March 2016) regardless of net worth; and all unlisted companies with a net worth of Rs 500 crore or more. Net worth for this phase is assessed against the standalone, audited financial statements as on 31st March 2014, or the first audited financial statements for an accounting period ending after that date.

Phase II: Mandatory from FY 2017-18

Ind AS became mandatory from accounting periods beginning 1st April 2017 for listed companies (or companies in the process of listing as of 31st March 2016) not already captured in Phase I and unlisted companies with a net worth of Rs 250 crore or more but less than Rs 500 crore. Once a company becomes subject to Ind AS under either phase, its holding, subsidiary, joint venture, and associate companies are also brought within scope, irrespective of whether they individually meet the net worth threshold.

Voluntary Adoption

Companies that don’t yet meet the mandatory thresholds under the corporate roadmap can choose to adopt Ind AS voluntarily, with effect from any accounting period, subject to board and shareholder approval and the standard transition requirements. This is a genuine, often underused option for companies preparing for an IPO, seeking foreign investment, or aligning reporting with an international parent or investor ahead of being legally required to do so once adopted voluntarily, the decision is irrevocable, and the company must continue applying Ind AS in all subsequent years.

Banks, NBFCs, and Insurance Companies Follow a Separate Roadmap

Scheduled commercial banks, NBFCs, and insurance companies do not follow the corporate roadmap above. NBFCs follow a separate two-phase roadmap set by the MCA in consultation with the RBI (Phase I from FY2018-19 for NBFCs with a net worth of Rs 500 crore or more or listed; Phase II from FY2019-20 for NBFCs with net worth between Rs 250 and 500 crore). Scheduled commercial banks were originally scheduled to adopt Ind AS from FY2018-19, but the RBI deferred this by a year and then deferred implementation indefinitely via its notification dated 22nd March 2019. Banks have not, as of today, implemented Ind AS. Insurers were similarly deferred by IRDAI. Voluntary adoption is not permitted for banks, NBFCs, or insurers under their respective regulatory roadmaps. For the full detail on this regulated-sector roadmap, see our dedicated coverage of the Ind AS roadmap for banks, insurance companies, and NBFCs.

Key Benefits of Adopting Indian Accounting Standards

Beyond the compliance obligation, Ind AS adoption brings concrete advantages, particularly for companies with cross-border ambitions or capital-raising plans:

• Stronger investor and lender confidence: Ind AS’s emphasis on fair value measurement and substance-over-form accounting gives investors, lenders, and rating agencies a more accurate picture of a company’s financial position than the prior Accounting Standards framework, which can directly support better terms on financing and valuation in fundraising.
• Comparability for cross-border transactions: Because Ind AS is converged with IFRS, financial statements prepared under it are far more readily comparable to those of international peers, a meaningful advantage in M&A due diligence, joint ventures, and any transaction involving a foreign counterparty who would otherwise need to reconcile Indian GAAP figures to an international standard.
• Reduced dual-reporting burden for internationally linked groups: Companies that are part of a multinational group or that have foreign investors requiring IFRS-aligned reporting often see a meaningful reduction in the cost and effort of maintaining parallel reporting frameworks once they adopt Ind AS.
• Better internal decision-making: The fair value and impairment-testing requirements under Ind AS often surface asset and liability positions that were obscured under historical-cost accounting, giving management a clearer basis for capital allocation and risk decisions.

Related Reading

For a broader explanation of what Ind AS is and how it differs from the standards it replaces, see our overview of Indian Accounting Standards. For the financial sector roadmap specifically,

How MBG Can Help

Determining whether and when Ind AS applies to your company and managing the transition once it does touches financial reporting, tax, and broader CFO-level strategy. MBG’s accounting advisory services support companies through Ind AS applicability assessment, first-time adoption (Ind AS 101), and transition planning, while our CFO advisory services help companies evaluate whether voluntary early adoption makes sense given fundraising, listing, or international investor plans. Learn more about our broader financial accounting advisory services.