KMP compensation needs five categories as well as a total
Ind AS 24 paragraph 17 requires key management personnel compensation in total and separately for short-term employee benefits, post-employment benefits, other long-term benefits, termination benefits and share-based payment. Salary paid through the bank is therefore not the complete disclosure base. The actual Ind AS 24 text in ICAI’s current compendium also contains the management-entity exception and the separate service-fee disclosure in paragraphs 17A and 18A.
This guide is checked on 25 October 2026 for financial statements prepared under Ind AS. It is a disclosure-reconciliation guide, not a Companies Act remuneration-cap calculation or a fresh valuation of employee benefits. All illustration amounts are assumed correctly measured under the applicable recognition/measurement standards; the exercise is to classify, reconcile and disclose them without omission or duplication.
Identify people by authority and responsibility
Ind AS 24 defines KMP by authority and responsibility for planning, directing and controlling the entity, directly or indirectly, including any director, executive or otherwise. Do not use the Companies Act section 203 appointment list as an automatic exhaustive accounting population. Conversely, a senior-sounding job title alone is not proof that the person directs and controls the entity. Retain organisation charts, delegated powers and the actual period in the relevant role.
For each identified person, map the appropriate compensation components and service period. Payroll, employee-benefit measurement records, equity-award workings and exit agreements can sit in different systems. The disclosure control should bring them together. A nil cash payment does not justify omitting a recognised share-based-payment amount or an appropriately measured accrual. Equally, a cash payment settling a prior-period amount should not simply be added again to the current-period compensation.
Keep the measurement basis and reconciliation explicit
Create a person/component matrix, mapped to the five categories. Reconcile its total to the relevant accounting records, explaining balances, settlement and timing differences rather than forcing the total to equal payroll bank transfers. Obtain validated allocations where pooled benefit calculations include both KMP and other staff. The disclosure working should identify the measured KMP amount, not invent a headcount allocation where individual facts differ.
A change in a person’s status during the year needs dated support. Determine the compensation attributable to the period and capacity that the applicable disclosure covers. A flat annual salary divided by twelve may be suitable for the stated simple illustration, but is not a universal method for bonuses, termination awards, performance awards or long-term valuations. Consult the actual terms and measurement working.
A management entity changes the data request, not the need for disclosure
Where KMP services are obtained from another entity, paragraph 17A removes the requirement to apply paragraph 17 to compensation paid or payable by that management entity to its own employees or directors. Paragraph 18A separately requires disclosure of amounts incurred by the reporting entity for those KMP services. Do not omit the reporting entity’s service fee merely because the provider will not disclose its own payroll, or substitute the provider’s salary expense for the reporting entity’s incurred fee.
If an invoice combines KMP services with other services, support any allocation with the contract and service evidence. Do not presume the whole invoice is KMP compensation or choose an arbitrary percentage to minimise disclosure. Related-party transaction and outstanding-balance disclosures under paragraph 18 remain a separate review; paragraph 17A is not a general exemption from all related-party disclosure.
Six worked illustrations
All facts and amounts below are fictional. Assumptions describe the model, not additional statutory rules.
Illustrative example 1: Five-category total
Assume correctly measured KMP amounts of ₹30,00,000 short-term benefits, ₹3,00,000 post-employment benefits, ₹2,00,000 other long-term benefits, ₹4,00,000 termination benefits and ₹6,00,000 share-based payment. Total compensation is ₹45,00,000. Present the five components as well as that total; cash salary alone would omit ₹15,00,000 here.
Illustrative example 2: Two people, category-level reconciliation
KMP A has ₹12,00,000 short-term and ₹1,00,000 post-employment benefits. KMP B has ₹18,00,000 short-term and ₹2,00,000 post-employment benefits. The category totals are ₹30,00,000 and ₹3,00,000; combined total ₹33,00,000. Adding both person totals and both category totals would incorrectly double it to ₹66,00,000.
Illustrative example 3: Accrual versus cash settlement
Assume the correctly measured current-year short-term compensation is ₹24,00,000, cash settlement against that amount is ₹20,00,000 and the remainder is payable, with no opening balance or other item. Unpaid accrual is ₹4,00,000. The current-year compensation remains ₹24,00,000, not merely the ₹20,00,000 paid or ₹28,00,000 from adding the unpaid amount twice.
Illustrative example 4: A documented midyear role change
A person becomes KMP on 1 October in an April–March year. Assume fixed compensation of ₹1,00,000 per month, no variable or other benefits and a working that correctly attributes compensation to the KMP service period. Six months × ₹1,00,000 gives ₹6,00,000 for that period. The illustration does not automatically include the other six months or prescribe allocation of a complex bonus.
Illustrative example 5: Management-entity fee versus its payroll
The reporting entity incurs ₹18,00,000 for KMP services from a management entity. The provider pays its own relevant staff ₹12,00,000. Paragraph 18A’s reporting-entity incurred fee is ₹18,00,000; paragraph 17A does not require a paragraph 17 breakdown of that provider payroll. Do not replace the fee with ₹12,00,000 or add both to claim a single ₹30,00,000 service fee.
Illustrative example 6: Support a mixed-service allocation
Assume a ₹20,00,000 management invoice has a contractually supported 60% KMP-service component and 40% unrelated administrative services. KMP service amount is ₹12,00,000; other services ₹8,00,000. This allocation is an explicit case fact, not an Ind AS-prescribed percentage. Separately review all applicable related-party transaction and balance disclosures.
Ten-step verification table
| Step | Action | Evidence |
|---|---|---|
| 1 | Confirm the reporting framework | Establish Ind AS applicability and the financial-statement entity and period. |
| 2 | Identify KMP by function | Document authority, responsibility and directors, rather than relying solely on statutory titles. |
| 3 | Record role dates | Retain appointments, changes and the actual service/capacity periods. |
| 4 | Collect measured components | Obtain payroll, benefit, termination and equity-award records from their responsible owners. |
| 5 | Map the five categories | Assign each relevant component once to the correct paragraph 17 category. |
| 6 | Reconcile accrual and cash | Explain unpaid amounts, settlements, opening balances and other timing differences. |
| 7 | Check allocation evidence | Use supportable KMP amounts from pooled benefits and mixed service arrangements. |
| 8 | Identify management entities | Distinguish reporting-entity service fees from provider employee compensation. |
| 9 | Review additional disclosures | Assess paragraph 18 transactions and balances and paragraph 18A service amounts. |
| 10 | Approve the disclosure bridge | Tie category totals, overall totals and source records; retain explanations and comparative consistency. |
Sixteen practitioner FAQs
1. Is the section 203 appointment list automatically the accounting KMP list?
No. Apply Ind AS 24’s functional definition and its express inclusion of directors.
2. Can a non-executive director be within KMP?
The definition includes any director, executive or otherwise. Determine the applicable compensation and disclosure facts.
3. Is everyone with a senior title necessarily KMP?
No. Evaluate actual authority and responsibility for planning, directing and controlling.
4. Does paragraph 17 require only one total?
It requires the total and the five stated category amounts.
5. Are post-employment benefits part of short-term salary?
They are a separate disclosure category; use the properly measured amount.
6. Are termination benefits separately identified?
Yes, paragraph 17 names that category.
7. Can share-based payment be ignored because no cash was transferred?
No. Obtain the relevant measured compensation amount and classify it appropriately.
8. Should a prior-period payable paid now automatically enter current compensation again?
No. Reconcile settlement and period attribution to avoid duplication.
9. Can headcount alone allocate every actuarial or long-term amount?
Do not assume that. Obtain a supported allocation consistent with the measurement working and actual facts.
10. Does a midyear appointment always require the whole annual salary?
Establish the relevant service/capacity period and actual terms rather than applying an unsupported annual inclusion.
11. Is a six-month salary allocation suitable for every award?
No. Bonuses, termination and long-term awards may require different fact-specific analysis.
12. What does paragraph 17A change?
For qualifying outsourced KMP services, it removes the paragraph 17 requirement for the provider’s own employee/director compensation.
13. Does paragraph 17A remove the service-fee disclosure?
No. Paragraph 18A requires the reporting entity’s incurred amount for those KMP services.
14. Should provider payroll replace the reporting entity’s fee?
No. They are different amounts belonging to different entities and purposes.
15. How should a mixed service invoice be separated?
Use contractual and service evidence supporting the actual KMP component; no fixed percentage is prescribed here.
16. Does the KMP compensation note replace every related-party transaction disclosure?
No. Review the additional transaction and outstanding-balance requirements separately.
Conclusion
Reconcile KMP compensation beyond cash salary, classify all five Ind AS 24 categories and distinguish management-entity service fees from provider payroll.