Ind AS norms, which are converged with global standards IFRS, can be followed by corporates on a voluntary basis from April 1 this year.
Moving closer to the implementation of new accounting norms, the government has notified the rules for Indian Accounting Standards (Ind AS) which will be mandatory for companies from April 1, 2016.
Ind AS norms, which are converged with global standards IFRS, can be followed by corporates on a voluntary basis from April 1 this year.
For companies having networth of Rs 500 crore or more, the new norms would be mandatory from April 1, 2016.
In a notification, the Corporate Affairs Ministry said the 'Companies (Ind AS) Rules 2015' would come into force from April 1, 2015.
Last month, the ministry had announced the Ind AS roadmap. Banking, insurance and non-banking finance companies are exempted from the roadmap.
Ind AS would be mandatory for "companies whose equity and/or debt securities are listed or are in the process of listing on any stock exchange in India or outside India and having net worth of Rs 500 crore or more," from April 1, 2016.
The deadline would be applicable for other entities having networth of Rs 500 crore or more. It would also apply for holding, subsidiary, joint venture or associate companies of these two class of entities.
Ind AS would be mandatory from April 1, 2017, for companies -- whose equity and/or debt securities are listed or are in the process of being listed within India or outside -- having a networth of less than Rs 500 crore.
Other companies, that are unlisted having a networth of Rs 250 crore or more but less than Rs 500 crore, also would have to start implementing Ind AS from April 1, 2017.
Holding, subsidiary, joint venture or associate companies of these entities would have to comply with this deadline.
Companies whose securities are listed or in the process of listing on SME exchanges would not be required to apply Ind AS. Such companies shall continue to comply with the existing accounting standards unless they choose otherwise.
"Any company opting to apply the Ind AS voluntarily... for its financial statements shall prepare its financial statements as per the Ind AS consistently," the Ministry's notification, dated February 16, said.
Once the Ind AS are applied voluntarily, "it shall be irrevocable," it added.
In his Budget speech in July 2014, Finance Minister Arun Jaitley had said there was an urgent need to converge the current Indian accounting standards with International Financial Reporting Standards (IFRS).
"The notification of these IFRS converged standards fills up significant gaps that exist in the current accounting guidance... This will in turn improve India?s place in global rankings on corporate governance and transparency in financial reporting," Sai Venkateshwaran, Head of Accounting Advisory Services, KPMG in India said in a statement.
An Indian company's overseas subsidiary, associate, joint venture and other similar entities can prepare its standalone financial statements in accordance with requirements of the concerned jurisdiction.
However, such companies "shall prepare its consolidated financial statements in accordance with the Ind AS", the notification said.
Companies which are not required to follow Ind AS would continue to follow Accounting Standards as prescribed in Companies (Accounting Standards) Rules, 2006.
Venkateshwaran said the corporate sector would now need to do its part to make the implementation a success.
"It's time for the corporates to make a holistic assessment of this change, and gear up for the implementation within the fairly short timelines," he noted.
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