Ind-AS & IFRS Advisory

Mandatory Ind AS applicability is governed by the Companies (Indian Accounting Standards) Rules 2015, as amended. Phase I (from April 1, 2016) covered listed companies and unlisted companies with net worth exceeding ₹500 crore. Phase II (from April 1, 2017) covered all remaining listed companies and unlisted companies with net worth exceeding ₹250 crore. Banking companies apply Ind AS as notified by the RBI in its separate circular. Once a company crosses the net worth threshold, it must apply Ind AS even if it subsequently falls below. NBFCs with net worth above ₹500 crore were brought in from April 1, 2018 vide MCA notification G.S.R. 365(E).

Ind AS 115 (Revenue from Contracts with Customers), which replaced AS 9, requires a five-step model: identify the contract, identify performance obligations, determine transaction price, allocate the price to obligations, and recognise revenue when (or as) each obligation is satisfied. For SaaS subscriptions, the performance obligation is typically satisfied over time under Ind AS 115.35(a) because the customer simultaneously receives and consumes the benefit. Under the old AS 9, SaaS revenue was often recognised on a straight-line basis by convention rather than by a rigorous framework. Ind AS 115 also requires separate identification of set-up fees, customisation, and support as distinct performance obligations, potentially deferring revenue that was previously front-loaded. Disclosures under Ind AS 115.114–129 are significantly more granular than under AS 9.

Under Ind AS 116, which replaced AS 19, lessees are required to recognise a right-of-use (ROU) asset and a corresponding lease liability for virtually all leases with a term exceeding 12 months, unless the underlying asset is of low value (defined as below approximately USD 5,000 when new, per IASB guidance applied under Ind AS 116.5). The ROU asset is depreciated under Ind AS 16 on a straight-line basis and the lease liability is unwound using the effective interest method under Ind AS 109. This means your office lease, previously shown only as an operating lease expense in the P&L, will now gross up both sides of your balance sheet, increasing reported debt and EBITDA (since rent moves from operating expense to depreciation + interest). This affects banking covenants referencing net worth or debt-equity ratios, and lenders must be engaged ahead of transition.

First-time adoption of Ind AS is governed by Ind AS 101 (First-time Adoption of Indian Accounting Standards). The date of transition is the beginning of the earliest comparative period presented; for example, if your first Ind AS financial statements are for FY 2024-25 with one year of comparatives, the transition date is April 1, 2023. You must prepare an opening Ind AS balance sheet as at that date. Retrospective application of all Ind AS is required except where Ind AS 101 provides mandatory exceptions (such as hedge accounting under Ind AS 109) or optional exemptions (such as deemed cost for PPE under Ind AS 101.D7, which many companies elect to avoid full retrospective revaluation). Reconciliations between previous GAAP equity and total comprehensive income to Ind AS equivalents must be disclosed in the notes under Ind AS 101.24–25.

Ind AS is substantially converged with IFRS as issued by the IASB, but there are carve-outs and deferments that create differences. Key differences include: Ind AS 101 allows the deemed cost exemption with a different reference date than IFRS 1; Ind AS 109 retains certain carve-outs from IAS 39 for macro-hedge accounting; and Ind AS 7 differs in classification of interest paid and received. For group IFRS consolidation, the parent's auditors will typically require a GAAP reconciliation or a separate IFRS conversion pack. We recommend maintaining a standing IFRS bridge document noting the Ind AS-to-IFRS adjustments specific to your subsidiary, which reduces audit time and group reporting lags. The bridging adjustments should be documented under IAS 8.28 as accounting policy changes in the IFRS group pack.