Requirement to follow Accounting Standards / Ind-As

[Brainstorming Queries]

Whether all the persons, business entities or companies are required to follow the Accounting Standards prescribed by the ICAI or MCA? There are various kinds of standards as prescribed. Which one is to be followed for an entity.

[Charu Tyagi]

There are 2 types of standards on Accounting as prescribed by MCA and recognised by ICAI

1. Accounting Standards (Indian GAAP)
2. Indian Accounting Standards as notified by MCA in 2015

For the purpose of application of above mentioned standards one has to check net worth of the entity/companies

For more clarification refer Manuals on Indian Accounting Standard

[Charu Tyagi]

• Any assesee who needs to maintain books of account on mercantile basis should follow accounting standards (Indian GAAP) irrespective of their Net Worth and
• Assessee whose net worth exceeds the limits as per the Phase I & Phase II has to follow Indian Accounting Standards (IndAS).

AI Summary

Clarification on Accounting Standards: Indian GAAP applies generally, IndAS mandatory for entities with high net worth per MCA rules. A query was raised about whether all individuals and business entities must adhere to the Accounting Standards set by ICAI or MCA and which standards apply to specific entities. The response clarified that two types of standards exist: Accounting Standards (Indian GAAP) and Indian Accounting Standards (IndAS) introduced by MCA in 2015. Entities maintaining books on a mercantile basis should follow Indian GAAP, regardless of net worth. However, entities with net worth exceeding specified limits must comply with IndAS. Further details can be found in the Manuals on Indian Accounting Standards.