Applicability of IND AS

Applicability of IND AS

• There are 3 types of Accounting Standards which are being followed in India:

1. Accounting standard Issued by Ministry of corporate affairs in 2006 :These standards are formed on the advice of NACAS(National Advisory Committee on Accounting Standards).These Accounting Standards are applicable only on companies. There are 1 to 29 Accounting Standards.
2.  Accounting standard Issued by ICAI –work according to Accounting Standard Board.These are applicable on non- companies There are 1 to 32 Accounting Standards issued by ICAI.
3. Accounting Standard -MCA 2015(IND AS) : There are 40 Accounting standards. They work on the advice of NACAS. These accounting standards are based on IFRS/IAS. These are Principal based standards where there is high use of fair value and substance over form.

• For IND AS 2015, there are Company AS Rules 2015 which comes into existence in Feb 2015. It includes two important rules:

RULE 4(i)-Applicability of IND AS

1. 1/04/2015: Applicable on Companies, Holding, Subsidiary, Associate and Joint Venture which applies for voluntary application.
2. 1/04/2016(Phase 1) : For Companies, Holding, Subsidiary, Associate and Joint Venture whose Net Worth is greater than or equal to 500cr whether listed or not.
3. 1/04/2017: For Companies, Holding, Subsidiary, Associate and Joint Venture including all listed companies and unlisted companies whose Net Worth is greater than or equal to 250cr.
4. 1/04/2018: For Non- Banking Financial Corporations (NBFCs), Holding, Subsidiary, Associate and Joint Venture whose Net Worth is greater than or equal to 500cr whether listed or not.

1/04/2019: For Non- Banking Financial Corporations (NBFCs), Holding, Subsidiary, Associate and Joint Venture including all listed companies and unlisted companies whose Net Worth is greater than or equal to 250cr.

5. 1/04/2018: For all Banking and Insurance Companies.

RULE 5:

For Banking and Insurance Companies, separate set of IND AS shall be prepared which are being issued by RBI/IRDA.

RULE 4(ii): Net Worth shall be taken as on 31/03/2014.

RULE 4(ii) (a) Net Worth for NBFC shall be taken as on 31/03/2016.

RULE 4(vii, viii, ix):  1. It requires consistency in application of IND AS.

2.   No company can revoke IND AS once it is applied even in case of breach of conditions.

• Meaning of Holding, Subsidiary, Associate and Joint Venture shall be identified as per AS-MCA 2015.
• Section 8 companies are not exempted from the applicability of IND AS.
• Computation of Net Worth

Net Worth = Paid up Share Capital + Reserves and Surplus – Losses

(Revaluation Reserve and Capital Reserve shall not be included in Reserves and Surplus)

As per the Clarification of ICAI ITFG-6 Issue (3) Capital Reserve will be considered only if arising from Promoters Contribution or Government Grant.

• Listing will be checked before application date but Net Worth will be checked as 31/03/2014, 31/03/2015, 31/03/2016.
• If subsidiary company is sold before the application of IND AS, then IND AS is not applicable due to Holding-Subsidiary Relationship.
• If subsidiary company is purchased after the application of IND AS, then IND AS shall be applicable due to Holding-Subsidiary Relationship.
• In case of date of application of IND AS, Comparative should be given of previous year. Additionally, Balance Sheet will be prepared on the beginning of Comparative Year.
• Voluntary/ Early Application of IND AS by Bank/Insurance Company/NBFCs is not allowed.
• Additional set of financial statements may be required for consolidation purpose. Such set shall be prepared by Subsidiary, Associate and Joint venture.
• Overseas foreign Companies are not required to follow IND AS.
• Indian Companies, being subsidiary of Foreign Company is required to follow IND AS.

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