The exemption is limited by relationship and disclosure paragraph
Under Ind AS 24 paragraphs 25–27, a reporting entity has a limited exemption from paragraph 18 disclosures for specified transactions, balances and commitments with the relevant government and other entities related through that same government’s control, joint control or significant influence. If used, paragraph 26 still requires the government’s name and relationship, individually significant transactions, and an indication of other collectively significant activity. “Government-related” does not mean “no related-party note”.
This guide is checked on 25 October 2026 against ICAI’s 2025–26 compendium. It concerns this financial-reporting exemption, not Companies Act approval thresholds, procurement authority, transfer pricing or a general exemption from every other Ind AS 24 disclosure. Establish the actual control, joint-control or significant-influence relationship rather than relying solely on a public-sector label.
Map why each counterparty is related
Build a relationship register identifying the government and the basis linking it to the reporting entity and counterparty. A government acting only as regulator does not automatically establish the paragraph 25 link. Likewise, an independently related director-controlled entity is not brought into this government exemption just because the reporting company also has a government shareholder. Transactions outside the specified population require their normal applicable disclosure analysis.
Choose detail using significance, not a borrowed numerical threshold
Paragraph 27 directs judgement about size, non-market terms, unusual operations, reporting to regulators or senior management, shareholder approval and relationship closeness. It does not establish a universal 10% or ₹1 crore cutoff. An individually important business acquisition or unusual financing should not be obscured among ordinary purchases. Conversely, numerous individually small transactions may be important collectively.
Keep gross purchases, sales, funding, balances and commitments distinguishable. A net bank movement can conceal economically different activity. The standard’s aggregation guidance also warns against obscuring important transactions; document what each subtotal represents and why the selected narrative or quantitative indication gives enough information. An internal screening threshold can help find candidates, but cannot replace the required judgement.
Reconcile the note to the ledger and supporting commitments
Use a note working with counterparty, relationship basis, transaction nature, gross period amount, balance, commitment and significance conclusion. Retain documentary support for commitments and distinguish them from recognised liabilities so totals are not misleading. Paragraph 26 calls for sufficient detail to understand the effect of the relevant activity, rather than a fixed standard paragraph saying dealings were routine.
All amounts below are fictional and are disclosure-population calculations, not prescribed materiality thresholds. The fact that an example is described as significant assumes a separately supported judgement. Common mistakes are excluding all government-facing payments without checking the relationship, applying another statute’s approval limit, netting different transaction types and treating the exemption as permission to remove KMP or unrelated categories from the overall note.
Six worked illustrations
All facts and amounts below are fictional. Assumptions describe the model, not additional statutory rules.
Illustrative example 1: Separate one significant acquisition
A supported individually significant acquisition from a qualifying government-related entity is ₹12 crore. Other qualifying routine purchases total ₹3 crore. The ₹15 crore combined arithmetic must not obscure the separate ₹12 crore acquisition and its nature.
Illustrative example 2: Many small transactions can be collectively significant
Sixty qualifying purchases of ₹2 lakh each total ₹120 lakh, or ₹1.20 crore. Even if no individual item is significant on the stated facts, assess and describe the collective activity under paragraph 26.
Illustrative example 3: Avoid netting purchases against sales
Qualifying purchases ₹80 lakh and sales ₹50 lakh produce net ₹30 lakh, but that net alone hides ₹130 lakh gross activity in two different directions. Preserve the ₹80 lakh and ₹50 lakh transaction types.
Illustrative example 4: Reconcile the reporting population
A register totals ₹5 crore dealings. Supported paragraph 25 transactions are ₹3.5 crore; independently related transactions outside that exemption are ₹1.5 crore. The latter do not disappear from normal related-party analysis.
Illustrative example 5: Keep commitments separate from booked balances
Recognised payable is ₹25 lakh and an additional unperformed commitment, not included in that payable, is ₹40 lakh. They are distinct disclosed facts; ₹65 lakh is not automatically a recognised liability.
Illustrative example 6: Do not borrow an automatic cutoff
Assume internal screening flags transactions above ₹50 lakh. An unusual non-market qualifying transaction of ₹30 lakh still needs significance review; it is ₹20 lakh below the internal screen, which is not a statutory safe harbour.
Ten-step verification table
| Step | Action | Evidence |
|---|---|---|
| 1 | Confirm reporting framework | Ind AS applicability and statement boundary. |
| 2 | Identify the government | Name and actual relationship evidence. |
| 3 | Map each counterparty | Same-government control, joint control or influence analysis. |
| 4 | Separate other related relationships | Normal paragraph 18 population outside the exemption. |
| 5 | Determine exemption use | Documented paragraph 25 applicability decision. |
| 6 | Identify individually significant items | Size, terms, unusual nature and governance evidence. |
| 7 | Aggregate other significant activity | Type-wise population and qualitative or quantitative extent. |
| 8 | Reconcile balances and commitments | Ledger, contracts and no-double-counting analysis. |
| 9 | Draft the paragraph 26 information | Government relationship and informative transaction descriptions. |
| 10 | Review the complete related-party note | Other applicable disclosures and clear cross-references. |
Sixteen practitioner FAQs
1. Does government ownership remove the entire related-party note?
No. Paragraph 26 information remains when the exemption is used.
2. Is the exemption from all of Ind AS 24?
It addresses the specified paragraph 18 disclosure population.
3. Must the government be identified?
Paragraph 26 requires its name and relationship nature.
4. Does mere regulation establish the relationship?
Do not confuse regulation with control, joint control or significant influence.
5. Can significant influence be relevant without control?
Yes. The specified relationship tests include it.
6. Does every public-sector counterparty automatically qualify?
Establish the same-government relationship and actual facts.
7. Can an independently director-related entity be swept into the exemption?
Not merely because the reporting company is government-related.
8. Is there a fixed rupee materiality cutoff in these paragraphs?
No universal numerical cutoff is prescribed here.
9. Can internal screening still help?
Yes, as a work-allocation aid, not a substitute for judgement.
10. Are unusual non-market terms relevant?
Paragraph 27 includes such considerations.
11. Must individually significant transactions be separately identified?
Paragraph 26 calls for their nature and amount in sufficient detail.
12. Can numerous small dealings matter collectively?
Yes. Assess their aggregate significance and indicate their extent.
13. Is netting purchases and sales always informative?
No. It can conceal different transaction types and scale.
14. Are commitments necessarily recognised liabilities?
No. Reconcile their nature and avoid double-counting with booked balances.
15. Does this determine company-law transaction approval?
No. Apply the relevant corporate-law and governance requirements separately.
16. What makes the final note useful?
A clear relationship explanation and amounts or descriptions that reveal significant effects rather than obscuring them.
Conclusion
Ind AS 24’s government-related exemption replaces specified paragraph 18 detail with paragraph 26 disclosures; it does not eliminate related-party reporting. Identify the government relationship, individually significant transactions and collectively significant activity.