IND AS vs AS
Accounting standards are introduced to harmonize accounting principles, policies & practices in order to standardize the financial statements of an entity thus making them comparable & more reliable.
Accounting Standards in India are issued by the Accounting Standards Board of Institute of Chartered Accountants of India (ICAI).
The main objective of Accounting Standards is to standardize the diverse accounting policies and practices. These Accounting Standards were implemented to Make financial statements comparable and reliable.
India has not adopted International Financial Reporting Standards(IFRS), instead India has adopted Indian Accounting Standards (Ind AS) which are based on and substantially converged with IFRS standards as issued by International Accounting standards board(IASB) The need to converge reporting standards (Existing Accounting Standards) with international standards was felt, which has led to the introduction of IND AS.
Why IND AS?
- Better Comparability & Transparency
- Better access to Capital Markets & Investor Community across the Globe
- Eliminating Multiple Reporting’s
- Increase in Cross Border Transactions
The Ministry of Corporate Affairs (MCA), notified Ind AS in year 2015 applicable to large entities as specified in its Roadmap for implementation of Ind AS.
MCA has Notified a phase –wise implementation of IND AS.
|Phase I – Applicable from F.Y 2016-17||Companies whose net worth is greater than or equal to Rs.500 crores.|
|Phase II – Applicable from F.Y 2017-18||● All listed companies, Holding,|
subsidiary, joint venture or associate of
the above companies is also required to
follow these standards.
● unlisted companies whose net worth is
more than 250 crores or more (but less
|Phase III – Applicable from F.Y 2018-19||IND AS is applicable to all banks, Insurance companies and also to the NBFCs Whose net worth is equal to Rs. 500 crores or more.|
|Phase IV – Applicable from F.Y 2019-20||Mandatory applicable to all NBFCs whose net worth is more than or equal to Rs.250 crores but less than Rs 500 crores.|
- A company may voluntary adopt the IND AS
- Once IND AS is applicable, the company should follow IND AS in the subsequent years also even if it does not meet the criteria of applicability as notified.
Key Differences between Indian Accounting Standards & Indian GAAP (accounting standards) have been addressed below:
|Indian Accounting standards (IND AS)||Indian GAAP(Accounting Standards)|
|These standards are Principle Based||These standards are Rule based|
|Consolidation is mandatory. For example: consolidation is required under Ind-AS 110 if the holding company has control over its subsidiary and definition of control is substance based||Such provision is not Applicable. For example: as per AS 21, consolidation is required if a company holds more than 50% of the voting rights or controls the board of directors.|
|Ind-AS provide guidance on various transactions like agriculture, business combinations etc||Such standards did not exist.|
|specific guidance were included on various matters like depreciation or revenue recognition||No such specific guidance were provided|
The differences of Few standards are detailed below
|STANDARD||Indian Accounting standards (IND AS)||Indian GAAP(Accounting Standards)|
|CASH FLOW STATEMENTS||IND AS 7-|
● Includes Bank overdrafts
payable on demand
● The term “functional
currency” is used
|AS 3 –|
● Does not includes Bank
● The term “Reporting
currency” is used
|CONSTRUCTION CONTRACTS||IND AS 11-|
● Requires Revenue Shall be
measured at Fair Value.
● Provide specific treatment
for Service Concession
● Operators would not
recognize Infrastructure as
PPE, would recognize
either a financial asset or
an intangible Asset or both.
● revenue is measured at
● Does not deal with Service
● Varied practices with some
infrastructure as PPE.
|REVENUE RECOGNITION||IND AS 18-|
● measured at the fair value
of the consideration.
● rebates, discounts, schemes cost will be reduced from
revenue when sales are
● interest to be recognised
using the effective interest
method as set out in Ind AS
● revenue is recognised in the
period in which services
would be rendered,
generally under percentage
● recognized at the contractual
amount of consideration.
● Cash discount and certain schemes are reported as
expenditure in financial
● recognition from interest on
time proportion basis as per
● revenue is recognised for
rendering services, using
either by completed services
or proportionate completion
|IDENTIFICATION OF SEGMENTS||IND AS 108 –|
Segment Identification is based on
|AS 17 –|
Identification is based on two sets of
segments, Primary & Secondary
● One is based on Products &
● The other is based on
|RELATED PARTY DISCLOSURES||IND-AS 24, Definition of related|
parties is different from that of
● Covers “Close members”
of the family of KMP
● Covers KMP of the entity
as well as those of its
● Includes any director
whether executive or
|AS 18, covers “Relatives” who may be expected to influence, or be influenced by that individual in his/her dealings with Reported enterprise.|
|PROVISIONS, CONTINGENT LIABILITIES & CONTINGENT ASSETS||IND AS 37 –|
● provisions to be at present
value if time value of
money is material
● The increase in liability is
treated as borrowing cost
● Provisions are recognised
based on Constructive
● prohibits discounting the
amounts of provision
● provisions are recognized
based on legal obligation
|TAXES||IND AS 12-|
● Based on Balance sheet
● Provides guidance that
deferred tax asset/liability arising from revaluation of
assets shall be measured on
the basis of tax
consequences from the sale
of asset rather than through
● Based on Income Statement
● Specifically provides
guidance regarding recognition of deferred tax in
the situations of Tax Holiday
under Sections 80-IA and 80-
IB and Tax Holiday under
Sections 10A and 10B of the
Income Tax Act, 1961.