Ind AS Applicability Checker — Indian Accounting Standards Roadmap for Companies & NBFCs
Ind AS is mandatory for: (1) any company with net worth ≥ ₹500 crore — Phase I; (2) all listed companies (mainboard) and unlisted companies with net worth ≥ ₹250 crore — Phase II; (3) NBFCs with net worth ≥ ₹500 crore from FY 2018-19; and (4) listed NBFCs and unlisted NBFCs with net worth ₹250–500 crore from FY 2019-20. Holding, subsidiary, JV and associate companies of any covered entity are also automatically covered. Banks and Insurance companies are deferred. SME Exchange listed companies and LLPs/non-corporates are excluded. Once Ind AS applies, reversal is not permitted.
Ind AS Applicability Checker
Answer six questions to determine whether Indian Accounting Standards (Ind AS) are mandatorily applicable to your entity, voluntarily available, or outside the framework. Logic is based on the Companies (Indian Accounting Standards) Rules, 2015 and all subsequent amendments through August 2025.
How Ind AS Applicability Works in India
Indian Accounting Standards (Ind AS) are accounting standards converged with International Financial Reporting Standards (IFRS), notified by the Ministry of Corporate Affairs (MCA) under Section 133 of the Companies Act, 2013. They are formulated by the Accounting Standards Board of the Institute of Chartered Accountants of India (ICAI) in consultation with the National Financial Reporting Authority (NFRA). Applicability is governed by the Companies (Indian Accounting Standards) Rules, 2015 and amendments thereto. Sectoral exemptions and roadmaps for banks and NBFCs follow notifications from the Reserve Bank of India and for insurers from the Insurance Regulatory and Development Authority of India.
The Three Tests of Applicability
- Entity type — Ind AS applies only to companies incorporated under the Companies Act. NBFCs follow a separate dated roadmap. Banks and insurers are governed by their sectoral regulators. LLPs, partnership firms, sole proprietorships and trusts are entirely outside the framework.
- Quantitative threshold — Net worth of ₹500 crore (Phase I) or ₹250 crore (Phase II / NBFC Phase IV) computed on the audited standalone balance sheet. Listed companies on mainboard exchanges trigger Ind AS irrespective of net worth.
- Group rule — Once any company is covered, its holding, subsidiary, joint venture and associate companies are automatically covered too — even if individually below threshold.
Once Ind AS, Always Ind AS
Rule 4(2) of the Companies (Indian Accounting Standards) Rules, 2015 makes Ind AS adoption irreversible. A company that crosses the net worth threshold and shifts to Ind AS cannot revert to Accounting Standards (AS) — even if its net worth subsequently falls below ₹250 crore or it delists from the exchange. The same applies to voluntary adopters. This principle ensures continuity and comparability of financial reporting and prevents opportunistic switching between frameworks.
Important: Ind AS framework currently has 39 standards in force. Originally 41 were notified in February 2015; Ind AS 11 (Construction Contracts) and Ind AS 18 (Revenue) were replaced by Ind AS 115 effective 1 April 2018, and Ind AS 17 (Leases) was replaced by Ind AS 116 effective 1 April 2019.
Phase-Wise Ind AS Roadmap
Corporate Roadmap (Companies other than Banks, NBFCs, Insurers)
| Phase | Effective From | Coverage | Net Worth Threshold |
|---|---|---|---|
| Phase I | FY 2016-17 | All listed & unlisted companies | ≥ ₹500 crore |
| Phase II | FY 2017-18 | All listed (mainboard) companies + Unlisted companies above threshold | ≥ ₹250 crore but < ₹500 crore (for unlisted); any net worth (for listed) |
| Group rule | Same FY as parent | Holding, subsidiary, JV, associate of covered entity | No threshold — automatic |
NBFC Roadmap
| Phase | Effective From | Coverage | Net Worth Threshold |
|---|---|---|---|
| Phase III | FY 2018-19 | NBFCs (listed or unlisted) | ≥ ₹500 crore |
| Phase IV | FY 2019-20 | All listed NBFCs + Unlisted NBFCs above threshold | ≥ ₹250 crore but < ₹500 crore (for unlisted); any net worth (for listed) |
| Group rule | Same FY as parent | Holding, subsidiary, JV, associate of covered NBFC | No threshold — automatic |
Banks & Insurance — Deferred
Scheduled Commercial Banks (excluding Regional Rural Banks) were originally notified to adopt Ind AS from 1 April 2018. Through a press release dated 5 April 2018 and notification dated 22 March 2019, the RBI deferred implementation indefinitely pending necessary amendments to the Banking Regulation Act. For Insurance companies, IRDAI was scheduled to notify Ind AS effective 1 April 2018 but implementation has been deferred pending IFRS 17 (Insurance Contracts) convergence. Both sectors continue with their respective regulator-prescribed accounting frameworks.
Excluded Entities
- SME Exchange listed companies — explicitly excluded under Rule 4(1)(iii)(b)(i). NSE Emerge and BSE SME listed entities continue with AS.
- LLPs and partnership firms — outside the Companies Act framework, hence outside Ind AS scope.
- Sole proprietorships, HUFs, AOPs, BOIs, Trusts — non-corporate entities; Ind AS does not apply.
- Overseas subsidiaries of Indian companies — may continue jurisdictional GAAP for standalone purposes, but must report Ind AS-adjusted numbers for Indian parent's consolidation.
- Branch offices of foreign companies — treated as extension of foreign parent; Ind AS does not apply to standalone branch reporting.
Voluntary adoption window: Any company can voluntarily adopt Ind AS for any FY beginning on or after 1 April 2015 — irrespective of net worth, listing status or sector. However, once opted, Rule 4(2) prevents reversal. Voluntary adoption is common for IPO-bound companies, those seeking foreign listing, or PE/VC-backed entities preparing for global exits.
Net Worth Calculation for Ind AS
Net worth is defined under Section 2(57) of the Companies Act, 2013 and computed on the audited standalone balance sheet — not on consolidated financials. The threshold is checked as on 31 March 2014 (the original reference date) or any subsequent FY-end.
Net Worth = (Paid-up Share Capital + Reserves) − (Accumulated Losses + Deferred Expenditure + Misc. Expenses not written off)
Reserves Included = Reserves created out of profits + Securities Premium Account + Capital Reserves from promoter contribution & government grants
Reserves Excluded = Revaluation Reserves + Reserves from write-back of depreciation + Reserves arising from amalgamation
Threshold Trigger Mechanism
If a company's net worth crosses ₹250 crore (or ₹500 crore) for the first time in any financial year, Ind AS becomes mandatory from the immediately following financial year. For example, if FY 2025-26 closing net worth crosses ₹250 crore, Ind AS applies from FY 2026-27 onwards. Comparative financial statements for FY 2025-26 must also be presented as per Ind AS in the first Ind AS financial statements, with the transition date being 1 April 2025.
Once-Met-Always-Applies Rule
Per Rule 3(2), once a company meets the net worth threshold in any FY, Ind AS applicability continues even if net worth subsequently falls. This is consistent with the broader irreversibility rule under Rule 4(2). The "highest net worth in the last 4 FYs" test is used to determine first-time applicability — companies cannot escape Ind AS by reducing net worth in later years through buy-backs or dividends.
Practical tip: Net worth is computed using audited standalone numbers — not provisional or interim figures. Companies near the threshold should ensure annual audit closure timing accommodates Ind AS transition planning, since first-time adoption requires retrospective application of all standards as of the transition date.
Need Help With Ind AS Transition or Compliance?
Patron's CAs handle Ind AS first-time adoption, transition adjustments, GAAP differences, IFRS-converged disclosures, statutory audits under Ind AS framework, and ongoing financial reporting compliance for companies and NBFCs.
Get CA Consultation →2025 Amendment Rules — What Changed
The MCA notified two sets of amendments in 2025. Neither changed the applicability roadmap — both updated specific Ind AS to align with IFRS developments.
First Amendment — G.S.R. 291(E) dated 7 May 2025
Amended Ind AS 21 (The Effects of Changes in Foreign Exchange Rates) by inserting paragraphs 8A–8B, 19A, 57A–57B and Appendix A. Provides detailed guidance on assessing whether a currency is exchangeable into another currency, estimating the spot exchange rate when not exchangeable, and required disclosures. Corresponding amendments made to Ind AS 101 paragraphs 31C and D27. Effective for annual reporting periods beginning on or after 1 April 2025.
Second Amendment — G.S.R. 549(E) dated 13 August 2025
- Ind AS 1 (Presentation): Clarifies classification of liabilities as current or non-current, particularly where covenants are involved. Right to defer settlement at reporting date governs classification.
- Ind AS 7 & Ind AS 107: New disclosure requirements for supplier finance arrangements (reverse factoring, supply chain finance) — improves transparency of impact on liabilities and cash flows.
- Ind AS 12 (Income Taxes): Introduces exception for OECD Pillar Two global minimum tax — entities may forgo recognising or disclosing deferred tax related to Pillar Two, but must provide qualitative and quantitative disclosures of exposure.
- Ind AS 116 (Leases): Enhanced transitional reliefs for first-time adopters with land and building lease components.
- Ind AS 10: Replaces "provision" with "covenant" terminology for consistency, effective 1 April 2026.
- Technical amendments: Cross-reference fixes in Ind AS 28, 32, 101, 108, 109, 115 — including replacement of references to superseded Ind AS 17 and 18.
Most provisions are effective from 1 April 2025. The Ind AS 1 carve-out permitting non-current classification for waivers obtained after reporting date but before approval applies only for FY 2025-26 — from 1 April 2026, the carve-out is removed bringing India fully in line with IFRS.
Source documents: Both amendment notifications are available on the MCA website. Companies should review supplier finance programs, debt covenant compliance, and global minimum tax exposure (for multinationals) — and update accounting policy manuals to reflect the renumbered standard references.