Ind AS 24 Related Party Disclosures: A Practitioner Guide for FY 2026-27
Ind AS 24 (Related Party Disclosures) is the Indian Accounting Standard that prescribes the disclosure requirements for related party relationships and transactions in financial statements.
The Ministry of Corporate Affairs notified Ind AS 24 via the Companies (Indian Accounting Standards) Rules, 2015. It became effective on a voluntary basis from 1 April 2015 and mandatory for Phase I companies from 1 April 2016. Ind AS 24 replaced AS 18 for companies under the Ind AS roadmap.
For FY 2026-27, listed companies must also comply with SEBI LODR Regulation 23 alongside Ind AS 24. Material related party transactions require enhanced disclosure and approval processes in addition to those required by this standard.
Ind AS 24 at a Glance
Ind AS 24 prescribes how entities must disclose related party relationships and transactions to ensure transparency in financial reporting. This standard primarily serves finance teams in listed and large unlisted companies that prepare financial statements under Indian Accounting Standards.
| Field | Value |
|---|---|
| Standard Number | Ind AS 24 |
| Full Name | Related Party Disclosures |
| Issuing Body | ICAI (Accounting Standards Board) |
| Notified By | MCA, Companies (Indian Accounting Standards) Rules, 2015, dated 16 February 2015 |
| Effective Date | 1 April 2015 (voluntary), 1 April 2016 (mandatory Phase I) |
| Supersedes | AS 18 (Related Party Disclosures) for Ind AS-applicable entities |
| Equivalent Standard | AS 18 ↔ Ind AS 24 ↔ IAS 24 |
| Applies To | All companies required to follow Indian Accounting Standards. Disclosure of related party relationships, transactions, and balances is required. |
What is Ind AS 24: Related Party Disclosures?
Ind AS 24 defines the rules for identifying related parties and mandates disclosures of their relationships and transactions in financial statements. Its core principle is that users must be able to understand the potential impact of related party relationships on an entity’s reported financial position and performance.
The Institute of Chartered Accountants of India introduced this standard as part of India’s IFRS convergence process. It replaced the narrower-scope AS 18 and aligns closely with IAS 24 issued by the International Accounting Standards Board.
Auditors, CFOs, finance controllers, and company secretaries rely on Ind AS 24 to ensure statutory compliance and transparent reporting of all related party dealings.
Objective of Ind AS 24
- Ensure that an entity's financial statements contain disclosures necessary to draw attention to the possibility that financial position and profit or loss may have been affected by related parties.
- Specify required disclosures about related party relationships, transactions, outstanding balances including commitments.
- Define related parties clearly and provide guidance on identifying them within complex group or ownership structures.
These objectives support faithful representation in financial reporting as required by Section 129 of the Companies Act, 2013. Proper application of Ind AS 24 ensures users receive a true and fair view regarding influence exerted through related party relationships.
Who Must Apply Ind AS 24?
Entities covered, applicability table
Ind AS 24 applies to all companies required to adopt Indian Accounting Standards as per the Ministry of Corporate Affairs roadmap:
| Company Category | Applicability Timeline |
|---|---|
| Listed companies + net worth ≥ Rs 500 crore | Mandatory from FY 2016-17 |
| Unlisted companies net worth ≥ Rs 250 crore | Mandatory from FY 2017-18 |
| All holding/subsidiary/joint venture/associate | Same as parent entity |
All other entities continue to apply AS 18 unless they voluntarily opt into the Ind AS regime.
Scope exclusions
Entities may exclude certain government-related entity disclosures:
- State-controlled entities (partial exemption available per Para 25-27).
When the standard does not apply
Where both parties are government-controlled entities or government agencies transacting with each other exclusively due to that relationship, Para 25-27 grants partial exemption from detailed transaction disclosure. Other standards such as Schedule III or SEBI LODR may still require summary information.
Key Definitions under Ind AS 24
| Term | Definition |
|---|---|
| Related party | Person or entity related to reporting entity per Para 9 criteria. |
| Related party transaction | Transfer of resources/services/obligations between reporting entity and a related party. |
| Close members of family | Family members likely able to influence dealings, spouse/children/dependants included. |
| Key management personnel | Persons with authority/responsibility for planning/directing/controlling entity activities. |
| Government | Government bodies/agencies at local/national/international level. |
| Compensation | All employee benefits paid/provided by entity in exchange for services rendered. |
Recognition and Measurement under Ind AS 24
When to recognise
An entity must disclose a related party relationship when such a relationship exists at any time during the reporting period, regardless of whether any transaction has occurred (Para 13). Disclosure is also triggered when there are transactions between the reporting entity and its related parties during the period.
Relationships between parents and subsidiaries require disclosure even if no intercompany transactions have occurred during the year. The same principle applies where key management personnel compensation exists or where commitments/outstanding balances arise out of past transactions.
Initial measurement
Disclosures under Ind AS 24 are both qualitative (nature/type) and quantitative (amounts/outstanding balances). At initial recognition:
Identify all persons/entities meeting Para 9 criteria.
Record details about each relationship category:
- Parent
- Subsidiaries
- Associates
- Joint ventures
- Key management personnel
- Close family members
- Entities controlled/jointly controlled by KMP/family members
For each transaction:
- State nature/type
- Amount involved
- Terms/conditions including pricing basis (arm’s length or otherwise)
- Outstanding balance at period-end
- Provisions made for doubtful debts or bad debts recognised
**Disclosure Formula:**
For every identified related party
→ Disclose nature + amount + terms + outstanding balances + provisions + category
→ Even if no transaction occurred between parent/subsidiary/KMP
Subsequent measurement
In every subsequent reporting period where a relationship continues or new transactions occur:
Update disclosures for new transactions/balances.
Present comparative information for prior periods.
Assess materiality, even small-value transactions may require individual disclosure if their existence could influence user decisions due to their nature.
Apply partial exemption for government-related entities only where permitted by Para 25-27; otherwise full disclosure applies.
Materiality judgments must consider both size and significance arising from relationship context rather than just rupee value alone.
Identification of Related Parties, The Para 9 Test
Para 9 sets out two main tests:
A person or close family member is a related party if that person:
(a) Controls/jointly controls the entity;
(b) Has significant influence over it;
(c) Is a member of KMP of either the entity or its parent.
An entity is a related party if any condition below applies:
Both entities are within same group structure;
One is associate/joint venture of other/group member;
Both are joint ventures with same third party;
One is post-employment benefit plan for employees of other/entity within group;
5-7. Any person above controls/significantly influences either entity directly or indirectly through close family/KMP connections.
Indian regulations add further layers:
Section 188 Companies Act defines ‘related party’ more broadly for approval requirements.
SEBI LODR Regulation 23 imposes additional obligations on listed companies.
Entities must ensure compliance with all relevant frameworks when making disclosures under this standard.
Worked Examples on Ind AS 24
Example 1: Disclosure of subsidiary and related party transactions
Maharashtra Group consists of Maharashtra Holdings Ltd (parent), Maharashtra Cement Ltd (100% subsidiary), and Mr Ashok Patel who serves as CEO/director across both entities during FY 2025-26:
(a) Maharashtra Holdings provided management services worth Rs 4 crore to Maharashtra Cement.
(b) Mr Ashok Patel received total remuneration Rs 2.40 crore from Maharashtra Holdings.
Computation Table
| Transaction | Nature/category | Disclosure requirement |
|---|---|---|
| Management services by parent | Parent-subsidiary | Relationship type; amount Rs 4 crore; terms/pricing; balance |
| Remuneration paid to KMP | KMP compensation | Short-term benefits Rs 2.40 crore; breakdown by category |
Journal entry
No special accounting entry arises solely due to disclosure requirements under this standard.
However:
- Standard entries record service income/expense;
- ‘Related Party Transactions’ note tabulates both items in standalone/CFS notes per Para 19;
- Eliminations apply in consolidated accounts;
- KMP compensation disclosed separately as per Para 17 categories.
Example 2: Director's family-controlled entity
Sundaram Logistics Ltd (subsidiary) purchased printing services worth Rs 80 lakh from M/s Sundaram Press, sole proprietorship owned by wife of director Mr Suresh Sundaram during FY 2025-26.
Computation Table
| Transaction | Nature/category | Disclosure requirement |
|---|---|---|
| Printing services purchase | Close family/KMP-controlled | Relationship type; amount Rs 80 lakh; arm’s length test; balance |
Journal entry
Standard purchase entry applies:
- Dr Printing Expense Rs 80 lakh
- Cr Trade Payables Rs 80 lakh
Additional note:
- ‘Related Party Transactions’ note discloses nature/category;
- Section 188 Companies Act approval required;
- Audit Committee review mandated if listed company;
- Arm’s length pricing basis disclosed explicitly as per Para 18 requirements.
Disclosure Requirements under Ind AS 24
Disclosures under Ind AS 24 are mandatory to ensure users of financial statements can assess the impact of related party relationships and transactions, as required by both Schedule III to the Companies Act, 2013 and this standard. Transparent reporting of these disclosures is critical for faithful representation and regulatory compliance.
| Item | Requirement | Para Reference |
|---|---|---|
| Parent-subsidiary relationship | Disclose name of parent and ultimate controlling party, irrespective of whether there have been transactions | Para 13-16 |
| Compensation of key management personnel | Total and by category: short-term, post-employment, other long-term, termination, share-based payment | Para 17 |
| Related party transactions during period | Nature of relationship, amount of transactions, outstanding balances including terms and conditions, provisions for doubtful debts, expense recognised for bad/doubtful debts | Para 18 |
| Categories of related parties | Disclosures made separately for each category: parent, entities with joint control or significant influence, subsidiaries, associates, JVs, KMP, others | Para 19 |
| Government-related entities | Partial exemption available; if applied, disclose nature of government relationship and related party transactions individually significant | Para 25-27 |
| Outstanding balances at year-end | Including commitments and guarantees | Para 18 |
Auditors must verify that all required disclosures under Ind AS 24 are complete and accurate in line with SA 700 reporting responsibilities.
Common Mistakes & Industry-Specific Considerations
Common errors auditors flag
- Failing to identify entities controlled by KMP's close family members as related parties
- Aggregating related party transactions that should be disclosed individually due to materiality
- Inadequate disclosure of terms and conditions, especially whether transactions are at arm's length
- Excluding the parent-subsidiary relationship disclosure when there are no transactions (mandatory under Para 13)
- Misclassifying KMP, Companies Act 2013 KMP definition (Section 2(51)) differs from Ind AS 24; both applicable
- Failing to disclose director's sitting fees, ESOPs, and other forms of compensation
Industry application notes
Listed companies must comply with SEBI LODR Regulation 23 in addition to Ind AS 24. Material related party transactions, those exceeding 10% of consolidated turnover or specified thresholds, require enhanced board approval and disclosure.
Private companies with promoter groups frequently have complex webs of related parties. Every transaction involving promoter-controlled entities needs careful identification and disclosure. Section 188 approval requirements under the Companies Act also apply.
Government-controlled entities such as PSUs may claim partial exemption from detailed transaction disclosure with other government-related entities under Paras 25-27. However, individually significant transactions must still be disclosed.
Ind AS 24 vs AS 18 vs IFRS: Key Differences
The table below summarises the principal differences between Ind AS 24 (Related Party Disclosures), AS 18 (the legacy Indian GAAP standard), and IAS 24 (the international equivalent). These differences affect scope, definitions, exemptions, and presentation:
| Aspect | AS | Ind AS | IFRS |
|---|---|---|---|
| Definition of related party | Narrower scope; primarily controlling/significant influence relationships | Broader; covers KMP family-controlled entities, post-employment plans, etc. | Same as Ind AS |
| KMP compensation disclosure | Required (Para 17 of AS 18) | Required by category | Required by category |
| Government-related entity exemption | Not available | Partial exemption (Para 25-27) | Partial exemption |
| Parent disclosure absent transactions | Required under Sec 129 Companies Act | Required (Para 13) | Required |
| Categorisation of related parties | Limited | Detailed (Para 19) | Same as Ind AS |
India has aligned Ind AS 24 closely with IAS 24 issued by the International Accounting Standards Board. The main carve-out is the additional partial exemption for government-related entities. The broader definition of related parties in Ind AS compared to legacy AS 18 captures more relationships relevant to Indian group structures.
Latest Amendments to Ind AS 24 (FY 2026-27)
No amendments have been notified to Ind AS 24 for FY 2026-27 as of 2026-05-02. The standard continues to apply in its existing form.
Related Standards You Should Know
- [Ind AS 110](/ind-as-110-consolidated-financial-statements/), Subsidiary identification feeds into related party identification.
- [Ind AS 28](/ind-as-28-investments-in-associates/), Associates and joint ventures are related parties.
- [Ind AS 19](/ind-as-19-employee-benefits/), Post-employment benefit plans for the benefit of the entity's employees are related parties.
- [Ind AS 102](/ind-as-102-share-based-payment/), Share-based payments to KMP are part of compensation disclosure.
- [AS 18](/as-18-related-party-disclosures/), Equivalent related party disclosure standard for non-Ind AS companies.
Need Help with Ind AS 24 Compliance?
Patron Accounting LLP advises listed companies, NBFCs, and private groups on full-scope Ind AS 24 compliance across India’s regulatory frameworks. Our team ensures your financial statements meet all MCA and SEBI requirements while avoiding common disclosure pitfalls.
Our services include:
- Statutory Audit
- Ind AS Advisory
- Financial Reporting & Schedule III
- Disclosure Review
Schedule a 30-minute consultation with our Ind AS team, Pune · Mumbai · Delhi · Gurugram.
Frequently Asked Questions (FAQs)
All companies required to prepare financial statements under Indian Accounting Standards must comply with Ind AS 24. This includes listed companies and large unlisted companies covered by the MCA’s roadmap. Other companies continue applying AS 18 unless they voluntarily adopt Ind AS.
A ‘related party’ is any person or entity meeting criteria in Para 9, such as control or significant influence over the reporting entity or its parent, or being a close family member or entity controlled by key management personnel. The definition is broader than legacy Indian GAAP.
Entities must disclose total compensation paid to key management personnel, and break it down into categories like short-term benefits, post-employment benefits, other long-term benefits, termination benefits, and share-based payments, as required by Para 17.
Major differences include a broader definition of ‘related party’, detailed categorisation requirements under Para 19 in Ind AS 24, a partial exemption for government-related entities not present in AS 18, and more granular KMP compensation disclosures.
SEBI LODR Regulation 23 imposes additional approval and disclosure requirements on listed companies for material related party transactions, typically those exceeding specified thresholds or percentages. Both frameworks apply concurrently for listed entities.
Yes. Section 188 defines ‘related party’ more broadly for purposes such as board approvals but does not override financial statement disclosures required by Ind AS 24. Both sets of requirements must be met where applicable.
No. Government-controlled entities may claim a partial exemption from detailed transaction disclosures per Paras 25-27 but must still disclose individually significant transactions with other government-related parties along with nature of their relationship.
Close members include those who may influence or be influenced by that person’s dealings, such as spouse/domestic partner, children or dependants (of person or spouse). Transactions involving such individuals or their controlled entities require assessment for disclosure.
Even if no transaction has occurred during the reporting period between a parent company and its subsidiary, Para 13 requires disclosure of their relationship, including naming both direct parent and ultimate controlling party, in both standalone and consolidated accounts.
Outstanding balances arising from past related party transactions, including loans/advances/guarantees, must be disclosed at each year-end along with terms/conditions per Para 18. Comparative figures should also be presented where relevant in accordance with Schedule III requirements.
About This Article
Reviewed by CA & CS Team · Patron Accounting LLP
Technical reviewer: CA Sundram Gupta, FCA
Last reviewed: 2026-05-02
Sources: ICAI Compendium of Accounting Standards · MCA Notification (Companies (Indian Accounting Standards) Rules, 2015, dated 16 February 2015) · IFRS Foundation