Indian Accounting Standards (Ind AS): What They Are and Why They Matter

What Are Indian Accounting Standards (Ind AS)?

Indian Accounting Standards (Ind AS) are India’s accounting framework, converged with International Financial Reporting Standards (IFRS), governing how companies recognise, measure, present, and disclose financial transactions in their financial statements. They were introduced to bring Indian financial reporting closer to globally accepted practice, following India’s 2009 G20 commitment to converge with IFRS, and are notified by the Ministry of Corporate Affairs (MCA) under the Companies Act, 2013, via the Companies (Indian Accounting Standards) Rules, 2015.

Ind AS replaced the prior set of Accounting Standards (AS) for companies brought within its scope. The shift is more than a name change: Ind AS places significantly more emphasis on fair value measurement, substance over legal form, and forward-looking disclosure (such as expected credit losses and impairment testing) than the historical-cost-based AS framework it replaced.

Converged with IFRS But Not Identical to It

Ind AS is built on IFRS as its base, but India has made specific, deliberate departures from certain IFRS requirements commonly referred to as “carve-outs” (where Ind AS diverges from IFRS) and “carve-ins” (additional requirements not present in IFRS). These exist to address India-specific legal, regulatory, or transitional considerations, for example, in areas like foreign currency translation options and certain financial instrument classifications. This means Ind AS financial statements are highly comparable to IFRS statements but not a word-for-word match, which matters for companies preparing financial information for an international parent or investor who expects strict IFRS compliance.

Who Must Apply Ind AS

Ind AS applies in a phased manner to companies based on net worth and listing status under the MCA’s corporate roadmap, with banks, NBFCs, and insurers following a separate roadmap set by their own regulators. Rather than restate the phase criteria here, see our detailed coverage of Ind AS applicability and the corporate roadmap for companies generally, or the Ind AS roadmap for banks, insurers, and NBFCs if your entity is in the regulated financial sector.

How the Standards Are Structured

Ind AS is not a single document but a set of individual standards, each addressing a specific area of financial reporting for example, Ind AS 1 governs the presentation of financial statements, Ind AS 7 governs the statement of cash flows, Ind AS 12 governs income taxes, Ind AS 115 governs revenue recognition, and Ind AS 116 governs lease accounting. A company applying Ind AS must apply the full applicable set consistently, not select individual standards selectively.

Ind AS 1: Presentation of Financial Statements

As a representative example of how an individual Ind AS standard works, Ind AS 1 sets out the requirements for how financial statements must be presented to ensure consistency, transparency, and comparability across reporting entities. It applies to all entities preparing financial statements under Ind AS, though sectors like banking and insurance have additional, sector-specific standards layered on top.

Key Components of Financial Statements under Ind AS 1

• The Statement of Financial Position presents the entity’s assets, liabilities, and equity at a specific point in time.
• The Statement of Profit and Loss reports the entity’s income, expenses, and net profit or loss over a period.
• The Statement of Changes in Equity details movements in shareholders’ equity during the reporting period.
• The Statement of Cash Flows, covering inflows and outflows from operating, investing, and financing activities (governed in detail by Ind AS 7).
• Explanatory Notes provide context and clarification for the figures reported in the financial statements.

General Features and Underlying Assumptions

• Fair Presentation: Financial statements must present a true and fair view of the entity’s financial position.
• Consistency: Accounting policies must be applied consistently from one period to the next.
• Materiality: All material items must be included in the financial statements.
• Accrual Basis: Transactions are recognised when they occur, not when cash changes hands.
• Going Concern: Financial statements assume the entity will continue operating for the foreseeable future, unless stated otherwise.
• Comparative Information: Prior-period figures must be included for comparison, with explanatory notes for context.

Related Reading

For a closer look at two specific standards within the Ind AS framework, see our coverage of Ind AS 7 (Statement of Cash Flows) and Ind AS 12 (Income Taxes).

How MBG Can Help

Whether you’re determining if Ind AS applies to your company, planning a first-time transition, or need ongoing support applying individual standards correctly, MBG’s accounting advisory services support companies through every stage of Ind AS adoption and compliance. Our broader financial reporting process and audit support services help ensure your Ind AS-compliant financial statements hold up through statutory audits and stakeholder scrutiny.