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The Ministry of Corporate Affairs (MCA) stipulated that all companies will have to prepare their financial statements as per the Ind AS. However, all companies will not have to switch over from the erstwhile Accounting Standards (AS) to the Indian Accounting Standards (Ind AS) at the same time and on the same date. The MCA, on February 16, 2015, notified through the Companies (Indian Accounting Standards) Rules, 2015 that the adoption and applicability of IND AS by the Indian companies would be in a phased manner. These rules were further amended in 2016, 2017 and 2018.

As per these rules, all companies, both Listed and Unlisted, whose net worth is `500 crore or more were required to adopt Ind AS from the 2016-17 fiscal. However, listed companies having net worth less than `500 crore and unlisted companies having net worth less than `500 crore but  above `250 crore or more were asked to adopt the Ind AS from the 2017-18 fiscal. 

Insurance companies, banks and NBFCs were to adopt the Ind AS from the 2019-20 fiscal. The Ind AS’s for banks and insurance companies shall be separately notified by the Reserve Bank of India (RBI) and Insurance Regulatory Development Authority of India (IRDAI), respectively. Apart from these mandatory dates, any company is allowed to opt for voluntarily adopting Ind AS from 205-16. If so opted, it would have to apply Ind AS consistently thereafter.

It is worth mentioning that if IND AS becomes applicable to any company as on a particular date, then IND AS shall also automatically become applicable to its holding company, all its subsidiaries, associated companies and joint ventures from the same date.

In case of foreign operations of an Indian company, though stand-alone financial statements may be prepared as per the accounting standards of that foreign country, however, they will have to simultaneously report their IND AS adjusted numbers to facilitate preparation of consolidated Ind AS accounts with their Indian parent company. Similarly, if a company operates in the banking, NBFC or insurance sector but its subsidiary operates in any other sector, such subsidiary will have to prepare its stand-alone accounts as per the general Ind AS rules, but will have to report their numbers in the banking, NBFC or insurance in the Ind As format to facilitate preparation of consolidated financial statements.

In all the cases, it can be observed that the date of applicability of Ind AS depends on net worth of the company concerned. For this purpose, net worth calculated as per stand-alone accounts of the company as on March 31, 2014 is to be considered. If the company was not in existence on that date, then the net worth of its first balance sheet date would be considered. Thus, if net worth as on March 31, 2014 was `500 crore or more, such company would adopt Ind AS from 2016-17. But if the net worth as on March 31, 2014 was less than `500 crore, Ind AS would be applicable from 2017-18.

The net worth is calculated as sum of paid-up share capital, reserves created out of profits and securities premium account, after deducting accumulated losses, deferred expenditure, and miscellaneous expenditure not written off. Capital reserve can be included, if arising out of promoter’s contribution. Reserves created out of revaluation of assets and written back depreciation shall not be included in net worth calculation.