Applicability Of IND AS In India

Shruti Agrawal

1. Voluntary Adoption:
Companies may voluntary adopt Ind AS for financial statements for accounting period beginning on or after 1st April 2015 with the comparatives for the periods ending 31st March 2015 or thereafter. If any company adopts the Ind AS then it will be required to follow i.e. there is no option of rollback.

2. Mandatory Adoption:

a. Following companies will have to adopt Ind AS mandatorily for financial statements for accounting period beginning on or after 1st April 2016 with the comparatives for the periods ending 31st March 2016 or thereafter:

i. Companies whose securities are listed or in process of listing in any stock exchange whether in India or outside India and having a net worth of Rs. 500 crores or more.

ii. Unlisted companies having a net worth of Rs. 500 crores or more

iii. Holding, subsidiary, Joint Venture, Associate of companies written in (i) or (ii)

b. Following companies will have to adopt Ind AS mandatorily for financial statements for accounting period beginning on or after 1st April 2017 with the comparatives for the periods ending 31st March 2017 or thereafter:

i. Companies whose securities are listed or in process of listing in any stock exchange whether in India or outside India and having a net worth of less than Rs. 500 crores.

ii. Unlisted companies having a net worth of Rs. 250 crores or more.

iii. Holding, subsidiary, Joint Venture, Associate of companies written in (i) or (ii)

3. Other Important Points:

a. Ind AS would apply to standalone and consolidated financial statements.

b. The rules clarify that an Indian company having an overseas subsidiary, joint venture, associate or which is a subsidiary, joint venture associate is required to prepare their Consolidated Financial statements as per these rules.

c. Here subsidiary company means a company in which the holding company:-

i. Controls the composition of Board of Directors.

ii. Exercises or Controls more than one half of total share capital either own or together with its subsidiaries.

Provided that such class or classes of holding companies as may be prescribed shall not have layer of subsidiaries beyond such numbers as may be prescribed.

d. Here associate company means a company in which the other company has a significant influence but this company is neither subsidiary or nor joint venture of that particular company.

e. Significant Influence for the point no. d means control of at least 20% of its total share capital, or of business decisions under an agreement.

f. Net Worth means the aggregate value of the total share capital and all reserves creating out of the profits and securities premium account after deducting the aggregate value of losses, deferred expenditure and miscellaneous expenditure not written off but does not include reserves created out of revaluation of assets, write back of depreciation and amalgamation.