Highlights:

  • India uses converged Ind AS for listed companies and specified unlisted companies, enhancing transparency in financial reporting.
  • Listed companies (excluding SME) must follow Ind AS regardless of net worth. The ₹250 crore threshold mainly applies to unlisted companies.
  • Key standards such as IFRS 9 (financial instruments) and IFRS 15 (revenue recognition) significantly impact NBFCs, financial services companies, IT, pharma, and other companies reporting under Ind AS.
  • Standardised reporting reduces asymmetry, aiding peer comparisons and cross-border analysis.

Introduction

International Financial Reporting Standards (IFRS) are accounting principles issued by the International Accounting Standards Board (IASB) that enable consistent, comparable financial statements across borders. Over 140 jurisdictions use IFRS or equivalents, creating a common language for global investors. India adopted a converged version, the Indian Accounting Standards (Ind AS), aligning listed company reporting with global benchmarks while incorporating local requirements.

Ind AS helps investors compare companies using uniform metrics, reducing the need for adjustments across jurisdictions.

What is IFRS? Definition and Core Purpose

IFRS establishes standardised accounting rules so investors can evaluate companies equally regardless of location. The IASB issues these standards to promote transparency, accountability, and economic efficiency. When Indian companies report under Ind AS (converged with IFRS), you can directly compare debt ratios, revenue, and profitability with minimal adjustments for national differences.

India’s Ministry of Corporate Affairs (MCA) introduced Ind AS as a converged version of IFRS rather than adopting IFRS in full. While Ind AS largely aligns with IFRS, it includes certain carve-outs and carve-ins to reflect India’s legal and regulatory framework.

IFRS Standards List: Key Standards

Major IFRS standards shape reporting for Indian listed companies under Ind AS:

  • IFRS 9 (Financial Instruments): Governs classification, measurement, and impairment; especially relevant for NBFCs and financial services.
  • IFRS 15 (Revenue from Contracts with Customers): Standardises revenue recognition, affecting IT, pharma, and real estate.
  • Ind AS 116 (equivalent to IFRS 16) – Leases: Brings operating leases onto the balance sheet, impacting debt-to-equity ratios and EBITDA calculations.
  • IAS 1 (Presentation of Financial Statements): Defines the structure of balance sheets and income statements.

These determine earnings quality and disclosures for NSE/BSE-listed entities.

IFRS in India: Ind AS Adoption and Status

Phase I (FY 2016–17): Companies (listed or unlisted) with a net worth of ₹500 crore or more were required to adopt Ind AS.

Phase II (FY 2017–18): All listed companies (except those listed on SME exchanges) became subject to Ind AS, irrespective of their net worth. Unlisted companies with a net worth of ₹250 crore or more but less than ₹500 crore were also required to adopt Ind AS.

Scheduled commercial banks continue to prepare financial statements under the existing Indian GAAP framework, as the Reserve Bank of India (RBI) has deferred Ind AS implementation. Certain NBFCs, however, are required to comply with Ind AS under the MCA roadmap.

Eligible companies may voluntarily adopt Ind AS where permitted under the applicable MCA rules.

2026 Insurance Sector Mandate: The Insurance Regulatory and Development Authority of India (IRDAI) officially mandated that all insurance companies (Life, General, Health, and Reinsurers) must adopt Ind AS effective April 1, 2026. This transition, specifically adopting Ind AS 117 (Insurance Contracts) and Ind AS 109, marks a monumental shift in how companies report profits, capital, and liabilities.

Why IFRS Matters for Indian Investors

Standardised reporting enables investors to compare companies using consistent accounting principles, improving the analysis of revenue, profitability, financial instruments, and disclosures across sectors. This improves transparency, reduces information asymmetry, and supports more informed comparisons between companies listed on Indian and global exchanges.

Building Conviction Through Standardised Data

While accounting standards alone do not determine a company’s investment potential, IFRS-converged Ind AS provides a reliable foundation for evaluating financial performance. Investors should use financial statements alongside qualitative factors such as business strategy, corporate governance, competitive position, and industry trends to make well-rounded investment decisions.

FAQs

1. What is the full form of IFRS?

International Financial Reporting Standards, issued by the International Accounting Standards Board for global accounting consistency across 140+ countries, including India through Ind AS convergence.

2. What is the difference between IFRS and Ind AS?

Ind AS is India’s converged version of IFRS. It largely aligns with IFRS while incorporating certain carve-outs and carve-ins to reflect India’s legal, economic, and regulatory environment.

3. Which companies in India must follow IFRS or Ind AS?

All listed companies in India (except those listed on SME exchanges) are required to follow Ind AS, irrespective of their net worth. Unlisted companies are required to adopt Ind AS if they meet the prescribed net worth thresholds under the MCA roadmap.

4. Why is IFRS important for investors?

Enables comparing financial statements across countries and sectors using standardised metrics, reducing information gaps when analysing stocks, especially multinationals and cross-border listings with consistent disclosure requirements.

5. What are the main IFRS standards?

Key standards include IFRS 9 (Ind AS 109) for financial instruments, IFRS 15 (Ind AS 115) for revenue recognition, and IAS 1 (Ind AS 1) for financial statement presentation.