written by | April 29, 2022

What Are Indian Accounting Standards (Ind AS)?

The principles of accounting are designed to ensure consistent and uniform accounting. Accounting professionals accept a set of principles and rules that everyone follows in accounting. The three most commonly used accounting principles are: Generally Accepted Accounting Principles (GAAP), International Financial Reporting Standards (IFRS), and Accounting Standards (AS).

Accounting Standards (AS) are accounting principles published by world-governing accounting bodies. They are intended to ensure that all organisations adhere to a consistent set of accounting rules. This will ensure that all organisations follow the same format for preparing their financial statements, including introducing and implementing Accounting Standards.

Below is a summary of the introduction of Accounting Standards in India.

Did You Know?

Research shows that 36% of respondents want to adopt Ind AS before the mandatory adoption date proposed by MCA. 65% believe Ind AS would offer better access to the investor community and capital markets.

Also Read: What is the List of Accounting Standard?

Indian Accounting Standards

The law requires Indian corporate institutes and their auditors to adhere to standardised rules when preparing and identifying statements financially. This standardisation process is intended to eliminate business entities' variations in financial statements presentation and treatment. The standardisation of data allows for easy comparisons between firms and among themselves. This standardisation also ensures that transactions get properly recorded so that readers can make fair judgments about an entity's financial status.

India currently has 2 assortments of Accounting Standards: the Indian Accounting Standards (Ind AS) and the Companies (Accounting Standard) Rules, 2006.

The Ministry of Corporate Affairs notified Ind-AS under International Financial Reporting Standards (IFRS) in 2015. This was to ensure that India has a globally aligned reporting system financially. The ICDS standards for tax computation were notified in February 2015. However, the regulators of banks and insurance companies will notify the implementation date separately.

An ideal accounting system provides a useful template to represent large numbers. This allows for fair financial statements to be presented. It helps to recognise financial standards and measure financial transactions. Standardised formats allow for comparability among companies.

General financial reports will offer the information about an entity to be useful for potential creditors, investors, and any other lender to make determinations regarding supplying resources. These decisions could include:

  1. Provide or settle loans and other credit.
  2. Buy, hold, or sell equity and debt standards.
  3. The ideal is to vote or affect the management's actions that impact the economic resources of the entity.

Indian Accounting Standards - Key Factors to Convert

There are a few factors that must be considered when Indian companies adopt the above standards:

  • Analysing the different tax implications of implementing these standards.
  • The company manages all activities.
  • Redefining and redrafting financial statements to maintain standards.
  • Various parties may enter into negotiations or revise contracts.
  • Accounting standards: Identification and vetting.
  • Preparation of financial reporting as per Indian Accounting Standards

The Benefits of Indian Accounting Standards

There are many benefits to adopting Indian Accounting Standards:

  • International base: These standards are famous internationally, and these principles are important for companies looking to expand internationally.
  • Harmonisation: Companies can harmonise their accounting rules by adopting these standards. Harmonisation can lead to the development of global accounting principles.
  • Compliance: Companies can be sure of compliance by adopting these standards.
  • Acceptance at the global level: These standards guarantee international recognition for all government agencies and institutions.

List of Indian Accounting Standards in India

Below is a listing of the most relevant Ind As:

Phase: 1

This is the phase that requires the Indian Accounting Standards to be applied. The Indian Governed implemented this phase on 01st April 2016. These companies would be eligible for Phase I:

  • Listed organisations: Organisations with securities listed on a well-known stock exchange.
  • Companies with a net worth of over ₹500 crores.

The exact worth request will review the company's financials for the last three years. These standards of accounting were implemented from 2016 to 2017.

Phase: 2

All companies were to get used to Ind AS in this phase. The Indian Accounting Standards will apply to the following financial year. The following organisation would be eligible for Phase II:

  • Listed companies have their protections listed on a recognised stock exchange as of 31st March 2016.
  • Companies with a net worth of over ₹250 crores but less than ₹500 crores.

Indian government implemented these accounting standards 2016-17. The previous financial years, i.e., 2013-2014, 2014-2015, and 2015-2016, would be considered.

Phase: 3

It was the mandatory application of Ind AS for banks, NBFCs & insurance organisations. This phase started on 1st April 2018. These companies would be eligible for phase III:

  • Companies with a net worth of over ₹500 crores. These exact worth needs are only applicable to these companies starting 01st April 2018.
  • The Development Authority and Insurance Regulatory of India would verify that the insurance organisations suit their net worth needs through a separate notification. The past three years of financial statements for NBFCs or other financial companies were used to check if they meet the net worth requirement - 2015-2016, 2016-2017, and 2017-2018.

Phase: 4

This phase is only applicable to NBFC with over ₹250 crores but not more than ₹500 crores of net worth. This phase began on 1st April 2019.

Also Read: Know the Application of Accounting Standard (AS)10 on Property, Plant and Equipment

Who Handles the Indian Accounting Standards?

The Ministry of Corporate Affairs does not notify the specific guidelines for corporate organisations based on the suggestions of the (NFRA). Instead, the accounting guidelines for India are determined and supervised in India by the organisation of chartered accountants, ICAI, and an ICAI committee. It is important to note that the allocation of the Indian Accounting Standards and Companies Rules 2006 will prevail in case of a conflict.

Ind AS Adoption

Ind AS was adopted in phases by Indian companies. All listed and unlisted companies adopted Indian Accounting Standards in the first and second phases. These standards were adopted by banks and other non-banking financial institutions (NBFCs) in the third and fourth phases.

The Ind AS has already covered NBFCs, but the banks have yet to adopt them. The RBI delayed this because of two factors. The Parliament was required to amend the Banking Regulation Act, 1949. The banking sector did not anticipate the change.

The RBI delayed Ind AS from April 2018 to April 2019, and it deferred its implementation indefinitely in March 2019. Because of many factors, the banking sector has always been opposed to Ind AS. Ind AS implementation will make many changes to the company's accounts.

How Can Ind AS Help Businesses?

Standardised norms Ind AS norms make it easier to compare and understand them and allow businesses to make changes when facing adverse economic conditions. 

The Ind AS provides streamlined methods that ensure company management doesn't misrepresent or manipulate financial information. This prevents them from becoming complicit in monetary fraud.


Indian Accounting Standards increase the reliability and readability of accounting standards for all users. Indian Accounting Standards attempt to identify recognised assets and liabilities, and it also covers non-controlling interests for the person who acquires the liabilities. The Indian Accounting Standard's ultimate goal is to ensure that large-scale activities are properly accounted for by providing constant disclosure, treatment, and reformation.

Accounting highly depends on calculations, so it's better to automate the process of debit and credit calculation as much as possible through platforms like Khatabook.
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Q: What is Ind AS 32?


Ind AS 32 specifies presentations and classification of financial standards as financial liabilities or equity. It sets out the requirements for the offset of financial assets and financial liabilities in the balance sheet.

Q: How many types of Accounting Standards are there?


Till now, there are 41 types of Accounting Standards in India.

Q: What are the Indian Accounting Standards?


Accounting Standards help in bringing uniformity to entire accounting. These standards set the same rules for the treatment of accounting transactions, meaning that all companies record the transactions similarly.

Q: Who issues Accounting Standards in India?


The Institute of Chartered Accountants of India (ICAI) sets accounting standards (AS) in India. The Indian Accounting Standards (Ind AS), as mentioned under section 133 of the Companies Act 2013, have been formulated considering the Indian economic & legal environment.

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