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Applicability of Indian Accounting Standard (IND AS) - Companies (Indian Accounting Standards) Rules, 2015​

Deepak Aggarwal
IND AS Rules 2015: New Accounting Standards for Companies with 250 Crore Net Worth, Exemptions for Insurance, Banking, NBFCs. The Indian Accounting Standards (IND AS) under the Companies (Indian Accounting Standards) Rules, 2015, apply to specific classes of companies as outlined in Rule 4. Companies not specified continue using the 2006 standards. IND AS mandates consistent application and prohibits mixing with old standards. Comparative figures from the previous year must be presented. Special provisions exist for companies listed or listing on the SME exchange. IND AS applies to both standalone and consolidated financial statements. Exemptions include insurance, banking, and NBFCs, while covered companies include those with a net worth of 250 crores or more, with specific adoption dates. (AI Summary)

Applicability of Indian Accounting Standard (IND AS)

Companies (Indian Accounting Standards) Rules, 2015​

Key Points

  • As per Rule 3 of Companies (Indian Accounting Standards) Rules, 2015, these standards are applicable only on classes of companies specified in Rule 4. (Refer summary below)
  • On rest classes of companies old Companies (Accounting Standards) Rules, 2006 will be applicable and consequently old AS will be applied.
  • All companies are allowed to follow only one set of accounting standards, combination of both are strictly not allowed.
  • Comparatives figures of preceding accounting year as per IND AS are also required to be given while presenting financial statements. 
  • Special provisions / exemption have been introduced for those companies who are listed or in process of being listed on Small & Medium Enterprise (SME) exchange. Here SME exchange means a trading platform of a recognized stock exchange or a dedicated exchange permitted by SEBI to list the securities issued in accordance with Chapter XA of SEBI (ICDR) Regulations and this excludes the Main Board (which is in turn is defined as a recognized stock exchange having nationwide trading terminals, other than SME exchange). 
  • These standards will be applicable on both i.e. standalone as well as consolidated financial statements.

 

Classes of companies specified in Rule 4 (Summary)

 

1) Specific Exempt companies

  • Insurance  companies
  • Banking companies
  • NBFCs

Even these companies are not allowed to voluntarily adopt IND AS.

 

2) Covered companies 

S. NO.

Class of companies

Particulars

Applicable w.e.f.

Remark

1

Any company

Voluntarily

01/04/2015

  • Non reversible decision / irrevocable
  • Need to be followed consistently

2

All listed companies or companies in process of listing in India or abroad

Net worth > = 500 crores

01/04/2016

  • Criteria need to be checked only at first time adoption i.e. in 1st year only.

 

All other companies i.e. unlisted companies

Net worth >= 500 crores

01/04/2016

  • Criteria need to be checked only at first time adoption i.e. in 1st year only.

 

Holding company, Subsidiaries , Joint ventures or associate companies  of above mentioned companies

No such condition

01/04/2016

  • Not covered overseas subsidiaries, joint ventures, associates or any other similar entities of an Indian company
  • IND As will be applicable on Consolidated financials of such Indian company
  • In case of vice versa case, IND AS will be applicable on Indian subsidiary, joint venture, associate or similar entities of a foreign company

3

All listed companies or companies in process of listing in India or abroad

Net worth < 500 crores

01/04/2017

  • Criteria need to be checked only at first time adoption i.e. in 1st year only.

 

All other companies i.e. unlisted companies

Net worth >=  250 crores <500 crores

01/04/2017

  • Criteria need to be checked only at first time adoption i.e. in 1st year only.

 

Holding company, Subsidiaries , Joint ventures or associate companies  of above mentioned companies

No such condition

01/04/2017

  • Not covered overseas subsidiaries, joint ventures, associates or any other similar entities of an Indian company
  • IND As will be applicable on Consolidated financials of such Indian company
  • In case of vice versa case, IND AS will be applicable on Indian subsidiary, joint venture, associate or similar entities of a foreign company
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