Difference Between Ind AS and IFRS: A Complete Comparison Guide

INTRODUCTION:
Explore the key differences between Ind AS and IFRS in this comprehensive guide. Understand accounting standards, convergence, applicability, and practical implications for Indian businesses.

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Accounting is the language of business, and its grammar is defined by standards. Two major sets of standards that dominate global financial reporting are IFRS (International Financial Reporting Standards) and Ind AS (Indian Accounting Standards). While India has moved toward convergence with IFRS through Ind AS, there are still notable differences between the two.

In this article, we’ll break down the key differences between Ind AS and IFRS, their objectives, structures, areas of divergence, and what Indian professionals need to understand when navigating both.

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What is IFRS?

IFRS stands for International Financial Reporting Standards, developed by the International Accounting Standards Board (IASB). These standards are used globally to ensure consistency, transparency, and comparability of financial statements.

• Adopted by over 140 countries
• Aims to provide a global accounting language
• Constantly updated to reflect global best practices

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What is Ind AS?

Ind AS, or Indian Accounting Standards, are accounting norms formulated by the Accounting Standards Board (ASB) under the Institute of Chartered Accountants of India (ICAI), in line with IFRS. Ind AS is India’s version of IFRS — not a direct copy, but a convergence framework adapted for Indian economic and regulatory needs.

• Notified by the Ministry of Corporate Affairs (MCA)
• Applicable in phases to Indian companies
• Developed to align Indian reporting with global practices while considering domestic conditions

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Why the Need for Convergence, Not Adoption?

India chose convergence with IFRS, not adoption, for several reasons:

• Legal and regulatory framework differences
• Indian taxation systems
• Level of economic development
• Need for industry-specific exceptions

As a result, Ind AS is IFRS-based, but with carve-outs (modifications) and carve-ins (additions) to suit Indian conditions.

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Key Differences Between Ind AS and IFRS

Here is a detailed comparison of the major differences:

1. Terminology and Presentation

Aspect	Ind AS	IFRS
Terminology	Indian terms like "Balance Sheet", "Statement of Profit and Loss"	Global terms like "Statement of Financial Position", "Statement of Comprehensive Income"
Legal Reporting	Aligned with Indian Company Law	Not country-specific

Example:
In Ind AS, you prepare a Statement of Profit and Loss, while IFRS calls it a Statement of Comprehensive Income.

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2. Carve-Outs and Carve-Ins

Ind AS contains specific carve-outs that make it different from IFRS. These modifications include:

• Use of expected credit loss model differently in some cases
• Treatment of foreign exchange in long-term monetary items (Ind AS 21)
• Deferred tax adjustments due to Indian tax laws

Example:
Ind AS 101 allows optional exemptions for first-time adoption, such as recognizing cumulative translation differences in reserves, which is not available under IFRS 1.

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3. Fair Value Measurement

Both standards promote fair value accounting, but Ind AS has limitations on fair valuation due to Indian regulatory concerns.

Example:
IFRS allows fair valuation for investment property under IAS 40. Ind AS 40, however, mandates the use of cost model due to real estate market concerns in India.

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4. Revenue Recognition

Both standards follow the 5-step model under IFRS 15 / Ind AS 115, but interpretation may differ due to industry practices in India.

Example:
In infrastructure contracts, Ind AS may consider government regulatory clauses in assessing performance obligations.

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5. Financial Instruments

Both IFRS 9 and Ind AS 109 cover financial instruments, but Ind AS has more detailed guidance on practical expedients for Indian banks and NBFCs.

Example:
The treatment of expected credit loss (ECL) in Indian banks under Ind AS 109 is adapted based on RBI guidelines, while IFRS 9 has a stricter approach globally.

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6. Consolidation and Joint Arrangements

IFRS 10 and Ind AS 110 deal with consolidation, but Ind AS includes additional clarifications relevant to Indian companies with complex group structures.

Example:
In India, corporate structures may involve multiple cross-holdings and subsidiaries, requiring nuanced interpretation of control under Ind AS.

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7. Leases (IFRS 16 vs Ind AS 116)

Both standards are aligned, but Ind AS 116 includes transition reliefs for Indian companies.

Example:
For first-time application, Ind AS allows lease liability measurement based on discounted lease payments, whereas IFRS provides more options.

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Application and Applicability in India

Ind AS Applicability

As per MCA notification, Ind AS is mandatory in phases:

• Phase I: Companies with net worth ≥ ₹500 crore (from FY 2016-17)
• Phase II: All listed companies and unlisted companies with net worth ≥ ₹250 crore
• Voluntary adoption allowed before mandatory dates

IFRS is not directly applicable in India except for entities like Indian subsidiaries of foreign companies that report to global HQs.

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Practical Implications for Professionals

1. CMA and CA Professionals

Cost and Management Accountants (CMAs) and Chartered Accountants (CAs) must:

• Understand both frameworks for advisory roles
• Handle differences in audit and tax reconciliations
• Train clients in Ind AS-compliant disclosures

2. Multinational Companies

Indian subsidiaries must reconcile Ind AS reports to IFRS for group consolidation. This involves:

• Mapping adjustments
• Explaining carve-outs
• Preparing dual reporting formats

3. Investors and Analysts

Investors should:

• Understand Ind AS disclosures
• Adjust ratios if comparing Indian firms with IFRS-compliant foreign peers

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Benefits of Convergence Over Direct Adoption

• Flexibility: Addresses India-specific issues
• Regulatory alignment: Suits local tax and legal systems
• Ease of transition: Smooth shift for Indian companies

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Challenges in Maintaining Ind AS

• Frequent updates in IFRS need tracking for convergence
• Complexity in dual reporting for MNCs
• Cost of compliance for medium enterprises

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Conclusion

Though Ind AS and IFRS are largely aligned, the key difference lies in customization. Ind AS retains the spirit of IFRS but adds clarity and practicality for Indian businesses. For accounting professionals, understanding both is essential for effective financial reporting, auditing, and global integration.

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FAQs: Ind AS vs IFRS

1. Is Ind AS same as IFRS?

No, Ind AS is converged with IFRS, not identical. It includes modifications (carve-outs and carve-ins) to suit Indian conditions.

2. Can Indian companies follow IFRS directly?

No, Indian companies must follow Ind AS, unless they report separately for a foreign parent entity that requires IFRS reporting.

3. Who prepares Ind AS?

Ind AS is prepared by the Accounting Standards Board of ICAI, under the guidance of MCA (Ministry of Corporate Affairs).

4. Are all IFRS standards applicable in India?

Only those IFRS standards which have been notified as Ind AS by MCA are applicable. Some IFRS standards are not yet converged.

5. How often are Ind AS updated?

Ind AS is updated periodically by ICAI to stay aligned with IFRS, subject to approval from MCA.

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