IFRS vs Ind AS: Key Differences Every Indian Business Must Know

The single most useful thing to understand about IFRS vs Ind AS is that Ind AS is converged with IFRS, not adopted from it. India took the IFRS text as its base and then applied a defined set of changes, known as carve‑outs and carve‑ins, which alter how specific transactions are recognised, measured and presented. Because of those changes, a set of Ind AS financial statements cannot claim unreserved compliance with IFRS as issued by the International Accounting Standards Board.

The second thing is more immediately practical, and most articles on this subject skip it entirely: Ind AS probably does not apply to your business. It applies to listed companies and to unlisted companies above a prescribed net worth, together with their group entities. Every other company applies the older Accounting Standards, and LLPs, partnership firms and proprietorships sit outside the Companies Act framework altogether. This guide sets out where the two frameworks genuinely diverge, but it starts with the question that decides whether any of it affects you.

01 What Is the Difference Between IFRS vs Ind AS?

IFRS is the set of standards issued by the International Accounting Standards Board and applied in over a hundred jurisdictions worldwide. Ind AS is the Indian equivalent, notified under the Companies (Indian Accounting Standards) Rules, 2015, made under the Companies Act, 2013, with the Institute of Chartered Accountants of India recommending the text and the Ministry of Corporate Affairs notifying it.

Structurally the two are close, and deliberately so. Ind AS numbering maps directly onto IFRS numbering, so Ind AS 115 corresponds to IFRS 15 on revenue, Ind AS 116 to IFRS 16 on leases and Ind AS 109 to IFRS 9 on financial instruments. Recognition and measurement are identical in the large majority of cases. The divergences are specific and confined to a handful of areas, which is precisely what makes them easy to miss: a preparer who assumes equivalence will be right most of the time and materially wrong on the rest.

There is a third framework this comparison usually forgets, and for most Indian businesses it is the only one that matters. Companies below the Ind AS thresholds continue to apply the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2021. Establishing which of the three frameworks applies to a particular entity is the first question in any engagement, and it is where our accounting and compliance services begin rather than end.

02 Which Accounting Standards Actually Apply to Your Business?

Before the IFRS vs Ind AS comparison means anything, applicability turns on entity type first and size second. Getting this wrong in either direction is expensive: applying Ind AS when it is not required imposes cost for no benefit, and failing to apply it when it is required produces a qualified audit report.

03 What Are the Main Carve‑Outs Between IFRS vs Ind AS?

Seven divergences between IFRS vs Ind AS account for most of the reconciliation work in practice. Each was a deliberate policy choice rather than an oversight, generally made to accommodate Indian legal requirements or the prescribed presentation format.

First‑time adoption adds a further divergence with lasting effect. Ind AS 101 permits an entity to use the carrying value under previous Indian GAAP as deemed cost for property, plant and equipment, intangible assets and investment property — a relief IFRS 1 does not offer in the same form. It is a transitional concession, but it leaves permanent differences in carrying amounts that persist for the entire remaining life of the assets concerned.

04 Where Does IFRS vs Ind AS Matter Most in Practice?

Four situations, in our experience, and none of them arises in routine trading.

• Acquisitions. A bargain purchase runs through profit or loss under IFRS and through OCI and capital reserve under Ind AS — changing reported profit without changing net assets.
• Property held for rental or capital appreciation. An entity that elected the fair value model under IAS 40 cannot carry it that way under Ind AS, so the asset must be restated to cost less depreciation and impairment.
• Borrowings with financial covenants. A covenant breached before the reporting date but waived afterwards may be non‑current under Ind AS and current under IFRS — moving the classification and the ratios lenders monitor.
• Group reporting across borders. Where an Indian entity is part of a group reporting under IFRS, the carve‑outs have to be reconciled every reporting period, not just at year end.

For a business without acquisitions, investment property, foreign group entities or covenanted borrowings, the practical difference between the two frameworks is close to nil.

05 When Does a Business Have to Move From AS to Ind AS?

The IFRS vs Ind AS question only becomes live once a business is covered, and three routes lead into Ind AS: listing or beginning the listing process, crossing the prescribed net worth threshold, or becoming the holding company, subsidiary, joint venture or associate of an entity already covered. The thresholds and phased commencement dates are set out in the Companies (Indian Accounting Standards) Rules, 2015 as notified by the Ministry of Corporate Affairs, and the current text should be checked against the entity's own audited figures rather than assumed from an older summary.

Two features of the transition catch businesses out. First, it applies to the group rather than to a single entity, so a covered parent brings its subsidiaries with it. Second, coverage is one‑way: an entity that becomes covered stays covered, and a later fall in net worth does not restore the earlier framework. Voluntary adoption carries the same irreversibility, which is why it should be tested against the ongoing cost of compliance rather than the convenience of one transaction.

06 How Do You Prepare for a Transition to Ind AS, Step by Step?

Eight steps. A transition done in this order is an accounting exercise; done in a different order it becomes a reconstruction.

1. Confirm applicability against audited figures. Test net worth and listing status on the audited financial statements, and map every group relationship that could pull the entity in.
2. Fix the transition date and comparative period. Ind AS requires an opening balance sheet at the date of transition, with the comparative period restated.
3. Perform a differences assessment. Go through actual transactions against the carve‑out areas — most entities find fewer differences than they feared.
4. Decide the Ind AS 101 elections. First‑time adoption exemptions, including deemed cost for PP&E, are one‑time choices with permanent consequences.
5. Restate the opening balance sheet. Recognise, derecognise, reclassify and remeasure, with every adjustment supported by a working.
6. Rebuild the presentation format. Ind AS financials follow Schedule III Division II — several line items have no equivalent in the previous format.
7. Update systems, policies and the chart of accounts. The policy manual, chart of accounts and reporting pack all need to reflect the new framework.
8. Brief the people who use the numbers. Reported profit will move without the business changing — lenders and investors should understand why before they see restated figures.

07 What Changed Under the New Law From 1 April 2026?

The Income‑tax Act, 2025 came into force on 1 April 2026, replacing the Income‑tax Act, 1961 after more than six decades. It does not touch IFRS vs Ind AS applicability, but it renumbers provisions comprehensively, so references businesses and their advisers had committed to memory now point to different section numbers. Templates, engagement letters, notes to accounts and internal checklists that still cite the old numbering should be refreshed.

What it did not change is which accounting standards apply. Accounting standards are prescribed under the Companies Act, 2013 and the rules made under it, and a change in tax legislation does not affect them. Your financial statements are prepared under one statute and feed into a computation under another.

Two other requirements apply regardless of which accounting framework you use, and both are commonly overlooked by smaller companies. Every company maintaining books in electronic mode must use software that records a non‑disableable audit trail of every transaction and edit, and the statutory auditor must report on it. Separately, a private company other than a small company must issue and hold its securities in dematerialised form. Where either is in doubt, an audit and assurance review is the cheapest way to find out.

08 How Did India Arrive at Ind AS?

India built its own standards first. The Institute of Chartered Accountants of India began issuing Accounting Standards in the late 1970s, later given statutory force under company law. They served a closed economy adequately, but diverged from international practice in ways that made Indian financial statements difficult for foreign investors and lenders to interpret.

Liberalisation from 1991 turned that divergence from a technical matter into a commercial one. Indian companies began raising capital abroad, listing overseas and acquiring foreign businesses, and each of those activities required financial statements an international counterparty could read without a reconciliation. Pressure for convergence built steadily through the following two decades.

Convergence rather than adoption was the eventual answer, and it was deliberate. After several deferrals, the Companies (Indian Accounting Standards) Rules, 2015 brought Ind AS into force in phases from FY 2016‑17. The carve‑outs were retained on purpose, to accommodate Indian legal requirements, the prescribed presentation format and specific market practices — giving India substantial comparability with IFRS while stopping deliberately short of full equivalence.

09 Frequently Asked Questions