To improve India’s place in the global rankings on corporate governance and transparency in financial reporting, the government on Friday notified the rules for Indian Accounting Standards (Ind AS), which will be mandatory for companies from April 1, 2016.
The new norms can be followed by corporates on a voluntary basis from April 1 this year. For companies having net worth of Rs 500 crore or more, the new norms would be mandatory from April 1, 2016.
Banking, insurance and non-banking finance companies are exempted from the Ind AS norms. Ind AS would be mandatory from April 1, 2017, for companies whose equity and/or debt securities are listed or are in the process of being listed within India or outside and having a networth of less than Rs 500 crore, according to the notification.
Holding, subsidiary, joint venture or associate companies of these entities would also will have to comply with this deadline. Companies whose securities are listed or in the process of listing on SME exchanges would not be required to apply Ind AS. Such companies shall continue to comply with the existing accounting standards of 2006 unless they choose otherwise, the notification said.
“Once the Ind AS are applied voluntarily, it shall be irrevocable," it added.Implementation of Indian Accounting Standards (Ind-AS) will improve the country's global standing on corporate governance and send out positive signals to investors, experts said.
In his Budget speech in July 2014, Finance Minister Arun Jaitley had said there was an urgent need to converge the current Indian accounting standards with International Financial Reporting Standards (IFRS).