Indian Accounting Standards Overview

Indian Accounting Standards (Ind AS) represent India's convergence with International Financial Reporting Standards (IFRS), adopted with certain carve-outs to reflect Indian legal and economic context. Prior to Ind AS, Indian companies followed Accounting Standards (AS) issued by ICAI and notified under the Companies Act — these are sometimes called Indian GAAP or old GAAP.

The phased rollout of Ind AS began with the largest listed companies. Phase 1 (from April 1, 2016) covered listed and unlisted companies with net worth of Rs 500 crore or more. Phase 2 (from April 1, 2017) covered listed companies and those with net worth of Rs 250 crore or more. Subsequently, further classes of companies were brought under Ind AS. Banks and insurance companies had separate timelines for adoption.

Key differences between Ind AS and old Indian GAAP include the treatment of financial instruments (Ind AS 109, converged with IFRS 9), revenue recognition (Ind AS 115, converged with IFRS 15), leases (Ind AS 116, converged with IFRS 16 — bringing most operating leases on balance sheet), and business combinations (Ind AS 103). These changes have had significant impacts on reported financials, particularly in capital-intensive and retail sectors.

Ind AS introduces fair value measurement more extensively than old GAAP, particularly for financial assets and liabilities. It also changes the treatment of employee benefits, intangibles, impairment testing, and segment reporting. The transition from old GAAP to Ind AS for any company typically requires restating prior-period comparatives, which can make multi-year trend analysis complex.

For investors and analysts, understanding Ind AS is essential for correctly interpreting financial statements of Indian listed companies. Differences in accounting policies between Ind AS and US GAAP or full IFRS also need consideration when comparing Indian companies with global peers or foreign-listed entities.