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India Provides Roadmap To New Accounting Standards

by Mary Swire, Tax-News.com, Hong Kong

05 January 2015


In pursuance of a proposal in the 2014-15 Budget statement in July 2104, India's Ministry of Corporate Affairs has drawn-up a revised road map for companies, other than bank, insurance and other finance companies, for implementation of new Indian Accounting Standards (Ind AS) that are to be largely in line with International Financial Reporting Standards (IFRS).

After wide consultations with various stakeholders and regulators, it has been decided that the new Ind AS shall be applicable to large companies on a voluntary basis in financial statements for accounting periods beginning on or after April 1, 2015, and on a mandatory basis for accounting periods beginning on or after April 1, 2016.

That decision will be applicable to companies with a net worth of INR5bn (USD79m) or more whose equity and/or debt securities are listed or are in the process of being listed on any stock exchange in or outside India; to any other company having a net worth of INR5bn or more; and to their holding, subsidiary, joint venture or associate companies.

Furthermore, the new Ind AS will be mandatory for accounting periods beginning on or after April 1, 2017, for listed companies having a net worth of less than INR5bn, as well as for unlisted companies having a net worth of at least INR2.5bn, but less than INR5bn.

However, companies whose equity or securities are listed or in the process of being listed on the SME Exchange will not be obliged to apply the new Ind AS. Such companies will be able to continue to comply with existing accounting standards, unless they choose otherwise.

It has been further specified that, once a company has opted to apply the Ind AS, it shall be required to use it for all subsequent financial statements.

It had been India's original intention to converge gradually with IFRS beginning in 2011, but that had been aborted. It is hoped that the adoption of Ind AS, and the bringing of Indian company accounting to the same level as global corporate accounting standards, will attract further foreign direct investment into the country.

TAGS: compliance | tax | business | India | law | accounting | international financial reporting standards (IFRS) | financial reporting | standards

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