Applicability of Ind AS in India

Phase I

Mandatory applicability of IND AS to all companies from 1st April 2016, provided: 

• It is a listed or unlisted company
• Its Net worth is greater than or equal to Rs. 500 crore*

*Net worth shall be checked for the previous three Financial Years (2013-14, 2014-15, and 2015-16). 

Phase II

Mandatory applicability of IND AS to all companies from 1st April 2017, provided:

• It is a listed company or is in the process of being listed (as on 31.03.2016)
• Its Net worth is greater than or equal to Rs. 250 crore but less than Rs. 500 crore (for any of the below mentioned periods).

Net worth shall be checked for the previous four Financial Years (2014-14, 2014-15, 2015-16, and 2016-17)

Phase III

Mandatory applicability of IND AS to all Banks, NBFCs, and Insurance companies from 1st April 2018, whose:

• Net worth is more than or equal to INR 500 crore with effect from 1st April 2018.

IRDA (Insurance Regulatory and Development Authority) of India shall notify the separate set of IND AS for Banks & Insurance Companies with effect from 1st April 2018. NBFCs include core investment companies, stock brokers, venture capitalists, etc. Net Worth shall be checked for the past 3 financial years (2015-16, 2016-17, and 2017-18)

Phase IV

All NBFCs whose Net worth is more than or equal to INR 250 crore but less than INR 500 crore shall have IND AS mandatorily applicable to them with effect from 1st April 2019.

Ind AS Compliances

1) Once the Ind AS becomes applicable, whether due to voluntary adoption or otherwise, the companies shall adhere to the compliances of Ind AS applicable to them. The financial statements under the Companies Act, 2013 are governed by Schedule III. There are 3 divisions in Schedule III:

• Division-I: Applicable to companies to whom accounting standards are applicable.
• Division-II: Applicable to companies to whom Ind AS compliance are applicable
• Division-III: Applicable to Non-Banking Financial Companies to whom Ind AS are applicable.

2) All the companies (excluding banks, NBFCs and insurance companies) preparing financial statements as per Ind AS shall do so in accordance with the Division-II of Schedule-III (also known as the Ind AS Schedule-III) as well as the Guidance Note on Division-II of Schedule-III of the Companies Act, 2013 (also known as Ind AS Guidance Note). In the case of NBFCs, Division-III shall become applicable.

However, companies referred to in Section 129(1) of the Companies Act, 2013 are not required to comply with the requirements of Ind AS Schedule III. This includes an insurance company, banking company, or company engaged in the generation or supply of electricity for which the form for presentation of financial statements has been specified under any other act that governs such class of companies.

However, in the case of companies engaged in the generation and supply of electricity, the Electricity Act, 2003 has not specified any format for the presentation of Financial Statements. Therefore, Ind AS Schedule-III can be followed by such companies till any other format is being prescribed by the relevant act.

3) The listed companies shall follow the guidelines issued by way of a circular by SEBI that prescribes the format for publishing quarterly, half-yearly, and annual financial results that are guided by the provisions of Ind AS and Ind AS Schedule-III. The companies may make suitable modifications.

4) The components of financial statements prepared in accordance with Ind AS compliance include:

• Balance Sheet
• Statement of Profit & Loss
• Statement of Cash Flows
• Statement of Changes in Equity
• Notes