With India deciding to converge with IFRS and not Adopt IFRS, Ind-AS is certainly the way forward for Indian Companies.

In simple terms, Convergence with IFRS means that India would not be applying the IFRS as issued by the International Body but would try to get its own accounting standards in snyc with the International Financial Reporting Standards. And these synced Indian Accounting Standards are popularly referred to as ‘Ind-AS’.

Recommended Read: Difference between IFRS Conversion and IFRS Adoption

But initially all the Ind-AS won’t be completely synchronised with the IFRS as there still exist some major differences in the Indian Economy as compared to the world economy. The Indian Economy is in developing stage as compared to the other developed economies and therefore, certain differences arise in Accounting Procedures as well.

Notified Ind-AS

On 25th February 2011, the Ministry of Corporate Affairs notified 35 Accounting Standards that have been synced with IFRS.

Although in the longer run, India intents to converge all its Ind-AS with IFRS, in the short run there are some significant differences between Ind-AS and IFRS, a few important ones being highlighted in this article.

Differences between Ind AS and IFRS

A Summary of the basic differences between Ind-AS and IFRS is presented below: –

1. Presentation of Financial Statements

Ind AS 1 deals with Presentation of Financial Statements and allows only the Single Statement approach.

In comparison, IAS 1 provides an option either to follow either the Single Statement Approach or follow the Two Statement Approach

Under the Single Statement Approach all items of Income & Expenses shall be recognised in the Statement of Comprehensive Income whereas the Two Statement Approach requires two statements to be prepared, one displaying the components of Profit & Loss and the other displaying the components of Other Incomes.

2. Treatment of Foreign Exchange Loss

Ind-AS 21 deals with Treatment of Foreign Exchange Losses and provides an option to recognise unrealised exchange differences arising on translation of long term monetary assets and liabilities either in Equity or in Profit & Loss A/c. If recognised in Equity, the amount so accumulated shall be transferred to Profit & Loss A/c over the period of maturity of such long term monetary items in an appropriate manner.

In comparison, IAS 21 says that unrealised exchange difference arising on long term monetary assets and liabilities shall be recognised immediately as Profit or Loss.

3. Classification of Expenses

Ind AS 1 deals with Presentation of Financial Statements and states that entities should present an analysis of the expenses recognised in the profit or loss using a classification based only on the nature of expense.

In comparison, IAS 1 says that entities can present an analysis of expenses recognised in Profit & Loss using either nature, or functional classification, whichever provides information that is reliable and more relevant.

4. Treatment of Interest and Dividends

Ind AS 7 deals with Statement of Cash Flows and states that Interest and Dividend paid is classified as Financing Cash Flows and the Interest and Dividend received is classified as Investing Cash Flows.

In comparison, IAS 7 states that Interest & Dividend paid and received shall be disclosed separately and each shall be classified in a consistent manner from period to period as Operating Cash Flows, Investing Cash Flows or Financing Cash Flows

5. Treatment of Construction Contracts

Ind AS 11 deals with Construction Contracts and states that Revenue shall be recognised on Percent of Completion Method without further evaluation.

In comparison, IAS 11 states that Revenue shall be recognised on the Completion of Contracts except where the contract meets the specified criteria.

6. Treatment of Government Grants

Ind AS 20 deals with Accounting for Govt. Grants and states that Non- Monetary Grants shall be recognised only at their Fair Value.

In comparison, IAS 20 states that Non- Monetary Grants can be recognised either at Fair Value or at their Nominal Value.

7. Treatment of Investment Property

Ind AS 40 deals with Investment Property and states that Investment Properties shall be measured using only the Cost Model.

In comparison, IAS 40 states that Investment Properties can be measured using either the Cost Model or the Fair Value Model.

8. Disclosure of Earnings per share

Ind AS 33 deals with Earnings per share and requires all EPS related information to be disclosed both in the Consolidated Financial Statements and separate Financial Statements.

In comparison, IAS 33 provides that when an entity presents both Consolidated Financial Statements as well as separate financial statements, it may give EPS related information in Consolidated Financial Statements only.


This is a Guest Post by CA Karan Batra