Ind AS Implementation Services in India – Transition, Compliance and Ongoing Reporting
The transition from Indian GAAP to Indian Accounting Standards (Ind AS) is not a simple restatement exercise. It changes how revenue is recognised, how financial instruments are measured, how leases appear on the balance sheet, how employee benefit obligations are calculated, and how subsidiaries and associates are consolidated. Companies that approach it as purely an accounting exercise — handing it to the finance team without structured project management, impact assessment, and senior oversight — typically find themselves with first-year Ind AS financials that require significant restatement, qualified audit opinions, or disclosures they were not prepared to make.
N D Savla & Associates provides structured Ind AS implementation services for companies transitioning from Indian GAAP for the first time and for businesses that adopted Ind AS but continue to face complex accounting judgements under the standards. Our work spans applicability assessment, gap analysis, accounting policy development, restated opening balance sheet preparation, first-year Ind AS financial statements, and ongoing reporting support. Our Ind AS practice connects directly to our Audit & Assurance Services, IFRS Implementation Services, and ICFR Audit & IFC Support — ensuring that the accounting transition and the control environment are managed together.
What Are Indian Accounting Standards (Ind AS)?
Indian Accounting Standards (Ind AS) are accounting standards notified by the Ministry of Corporate Affairs (MCA) under Section 133 of the Companies Act, 2013, read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015. Ind AS is substantially converged with International Financial Reporting Standards (IFRS) — though not identical, as certain carve-outs exist to accommodate Indian legal and regulatory requirements.
The primary difference from the earlier Indian GAAP framework is the shift from a rules-based approach to a principles-based approach. Under Ind AS, management is required to exercise significant judgement on measurement, recognition, and disclosure — and to document the basis for those judgements. This places a greater burden on CFOs, finance teams, and audit committees than the earlier standards, but it produces financial statements that are more comparable internationally and more reflective of economic reality. For companies with overseas investors, foreign subsidiaries, or IPO ambitions, Ind AS-compliant financials are increasingly a prerequisite rather than a choice.
Ind AS Applicability – Which Companies Must Adopt Ind AS?
Ind AS applicability is determined by net worth, listing status, and group relationships. The MCA’s phased roadmap has established the following applicability thresholds:
- Listed companies and their unlisted holding, subsidiary, associate and JV companies: Required to adopt Ind AS from April 1, 2016 (Phase I) or April 1, 2017 (Phase II) depending on net worth.
- Unlisted companies with net worth of Rs. 250 crore or more: Mandatory Ind AS adoption from April 1, 2017.
- Unlisted companies with net worth of Rs. 500 crore or more: Required to adopt from April 1, 2016.
- NBFCs listed or with net worth of Rs. 250 crore or more: Ind AS applicable from April 1, 2018 or 2019 depending on net worth, under a separate NBFC roadmap.
- Holding, subsidiary, JV or associate companies of any Ind AS-applicable entity: Must also adopt Ind AS for the purposes of consolidated financial statements, even if the entity itself does not meet the threshold independently.
- Voluntary adoption: A company may voluntarily adopt Ind AS even if not required — but once adopted, it cannot revert to Indian GAAP.
Companies below these thresholds continue to prepare financial statements under the Companies (Accounting Standards) Rules, 2006 (Indian GAAP / AS framework). The threshold is calculated on the basis of net worth as at the end of the immediately preceding financial year.
Key Areas Where Ind AS Differs Significantly from Indian GAAP
The most significant accounting differences — and therefore the areas requiring the most careful implementation attention — include:
Revenue Recognition – Ind AS 115
Ind AS 115 replaces the earlier revenue standards with a five-step model: identify the contract, identify performance obligations, determine the transaction price, allocate the price to performance obligations, and recognise revenue when (or as) each obligation is satisfied. For businesses with multi-element contracts, variable consideration, long-term construction projects, or software and SaaS arrangements, this can significantly change both the timing and amount of recognised revenue compared to Indian GAAP.
Financial Instruments – Ind AS 109
Ind AS 109 introduces the Expected Credit Loss (ECL) model for impairment of financial assets, replacing the incurred loss model. Loans, trade receivables, and investments in debt instruments must be assessed for expected credit losses on a forward-looking basis — even before any default has occurred. For banks and NBFCs, this has a significant impact on provision levels. For non-financial companies with large trade receivables portfolios, the ECL model can materially change the provisioning amount compared to the previous allowance for bad and doubtful debts.
Lease Accounting – Ind AS 116
Ind AS 116 eliminated the distinction between finance leases and operating leases for lessees. Under the standard, virtually all leases must be recognised on the balance sheet as a right-of-use (ROU) asset and a corresponding lease liability. This significantly increases the total assets and total liabilities reported, changes EBITDA (as the lease expense is replaced by depreciation and interest), and affects key financial ratios. Companies with significant office, factory, retail, or warehouse leases — typically those that were classified as operating leases under Indian GAAP — are most affected.
Employee Benefits – Ind AS 19
Ind AS 19 requires actuarial gains and losses on defined benefit plans (primarily gratuity) to be recognised immediately in Other Comprehensive Income (OCI), rather than being amortised through profit and loss over future periods as permitted under Indian GAAP. This eliminates the deferred recognition of actuarial gains and losses, making the defined benefit obligation on the balance sheet more current and volatile. Companies with large workforces and significant gratuity obligations see an immediate balance sheet impact on first adoption.
Deferred Tax – Ind AS 12
Ind AS 12 requires deferred tax to be recognised on all temporary differences between the carrying amount of an asset or liability in the financial statements and its tax base. This includes deferred tax on fair value adjustments, on OCI items, and on first-time adoption adjustments — several of which had no deferred tax recognition under Indian GAAP. The deferred tax calculations under Ind AS are substantially more complex and require close coordination between the accounting team and the income tax function.
Our Ind AS Implementation Process
We follow a structured, phase-wise implementation methodology that gives companies visibility into the accounting impact, systems changes, and disclosure requirements at each stage before the first Ind AS financial statements are published:
- Applicability and readiness assessment: Confirming whether and from which date the company is required to adopt Ind AS, and assessing the readiness of the finance team, accounting systems, and data quality.
- Ind AS impact and gap analysis: A detailed comparison of the company’s current accounting policies against Ind AS requirements across all material areas — quantifying the expected financial impact of each difference.
- Opening balance sheet preparation (Ind AS 101): Preparation of the restated opening balance sheet as at the transition date under Ind AS 101 (First-time Adoption), including all required adjustments and elections of available exemptions.
- Accounting policy development: Drafting of Ind AS-compliant accounting policies covering all material standards, calibrated to the company’s specific transactions and judgements.
- First-year Ind AS financial statements: Preparation of complete Ind AS financial statements — including comparatives, OCI, notes, and all required disclosures — for the first year of adoption.
- Finance team training and ongoing support: Training of the finance and accounts team on the new standards, and ongoing advisory support for accounting judgements as they arise in subsequent years.
F.A.Q.
Unlisted companies with net worth of Rs. 250 crore or more are required to adopt Ind AS mandatorily. The earlier threshold required companies with net worth of Rs. 500 crore or more to adopt from April 1, 2016. Net worth is calculated as per the audited balance sheet of the immediately preceding financial year. Holding, subsidiary, associate, and JV companies of an Ind AS-applicable entity must also adopt Ind AS for consolidated reporting purposes, regardless of their own net worth.
Ind AS is substantially converged with IFRS but not identical. The MCA has introduced certain ‘carve-outs’ — deviations from IFRS — to accommodate Indian legal, regulatory, and business realities. Examples include the treatment of long-term foreign currency monetary items (which can continue to be amortised under Ind AS rather than immediately recognised in P&L as required by IFRS 9), and certain relaxations in hedge accounting. For companies preparing financials for international investors or overseas stock listings, the carve-outs need to be specifically disclosed and may require IFRS reconciliation.
Ind AS 101 (First-time Adoption of Indian Accounting Standards) governs the transition process. The transition date is the beginning of the earliest comparative period presented in the first Ind AS financial statements — typically the start of the year before the first Ind AS reporting year. On the transition date, the company prepares a restated opening balance sheet under Ind AS, recording all required adjustments from Indian GAAP to Ind AS. Ind AS 101 provides a number of optional exemptions from full retrospective application in areas such as business combinations, fair value as deemed cost, and share-based payments — selecting the right exemptions is a critical part of the transition planning.
Traditional Accounting Standards (AS) follow Indian GAAP, whereas Ind AS is largely aligned with international standards such as IFRS.
Under Ind AS 116, most operating leases (previously off-balance-sheet for lessees) must now be recognised on the balance sheet as a Right-of-Use (ROU) asset and a lease liability. The P&L impact also changes — instead of a straight-line operating lease expense, the company records depreciation on the ROU asset and interest on the lease liability (front-loaded in the early years of a lease). This increases EBITDA (since the lease expense moves below EBITDA) but increases debt-like obligations on the balance sheet. Companies with significant real estate, retail, or logistics leases see the largest balance sheet and ratio impact.
No. Once a company has adopted Ind AS — whether mandatorily or voluntarily — it cannot revert to the Indian GAAP framework. This is explicitly prohibited under the Companies (Indian Accounting Standards) Rules. Additionally, if a company falls below the net worth threshold after having adopted Ind AS, it is still required to continue reporting under Ind AS. This makes the voluntary adoption decision particularly important to evaluate carefully before proceeding.
Yes. Ind AS introduces new recognition principles, measurement methods, and disclosure requirements, which change the structure and presentation of financial statements.
