Start with the company’s own criteria and its regulated status
Section 133 of the Companies Act, 2013 and Rule 4 of the Companies (Indian Accounting Standards) Rules, 2015 set the main Ind AS roadmap. Identify the company’s sector, equity or debt listing status and standalone statutory net worth. Also check its direct relationship to a qualifying company and any applicable sector exception. Where the rules apply, Ind AS covers both standalone and consolidated financial statements where each is required. The currently applicable notified AS framework should be checked separately for companies outside Ind AS.
| Roadmap | Original start date | Who it covers |
|---|---|---|
| Non-sector company, phase I: Rule 4(1)(ii) | 1 April 2016 | Companies with net worth of ₹500 crore or more, including listed and unlisted companies, and the specified related companies. |
| Non-sector company, phase II: Rule 4(1)(iii) | 1 April 2017 | Companies with equity or debt listed or in the process of listing in India or abroad and net worth below ₹500 crore; unlisted companies from ₹250 crore to below ₹500 crore; specified related companies. |
| SME and specified platform proviso | Read with the listing criteria | The Rule 4(1) proviso excludes the qualifying SME exchange and specified no-IPO platform categories described there, other than the voluntary option in clause (i). The proviso does not set a ₹250 crore override. Check the status and successor listing provisions, and whether the company has already adopted Ind AS. |
| NBFC phase I: Rule 4(1)(iv)(a) | 1 April 2018 | NBFCs with net worth of ₹500 crore or more, and specified related companies to the extent not already covered by the earlier clauses. |
| NBFC phase II: Rule 4(1)(iv)(b) | 1 April 2019 | NBFCs listed or in process of listing equity or debt in India or abroad with net worth below ₹500 crore; unlisted NBFCs from ₹250 crore to below ₹500 crore; specified related companies, with the exceptions in the rule. |
| Banks and insurers | Apply separate sector requirements | Do not infer an adoption date from the corporate or NBFC phase dates. |
Scheduled commercial banks have a separate RBI framework. The RBI deferred the earlier general Ind AS implementation in March 2019. Its notified 2026 commercial bank directions introduce a prudential expected credit loss framework from 1 April 2027 for banks in scope; those directions do not by themselves implement full Ind AS financial statements. For insurers, the IRDAI’s 2026 amendments introduced Schedule IIA Ind AS reporting from 1 April 2026, with individual one-year forbearance possible under Regulation 6A. An insurer granted forbearance continues to use the specified Schedule II statements during that year and must also submit quarterly Schedule IIA information. Verify the applicable entity’s scope and any forbearance order.
Use standalone audited figures and the correct date
For companies under Rule 4(2), the base is standalone accounts as at 31 March 2014 or the first audited period ending after that date, as specified. If the company did not then exist or first reaches a threshold later, use the first audited year-end accounts in which the threshold is met; the rule then applies from the immediate next accounting year. Rule 4(2A) uses 31 March 2016 as the NBFC base, with its own corresponding first-crossing provision. If an entity is covered by listing or a group relationship, assess that separate trigger and timing.
Section 2(57) uses the audited balance sheet. Reconcile statutory paid-up share capital, profit-created reserves, securities premium and the debit or credit balance of profit and loss; then account for the specified losses and unwritten-off expenditure without double counting amounts. An Ind AS presentation label is not the whole statutory calculation. Identify the origin of each reserve and reconcile any share class shown as a liability for financial reporting to the legal capital records.
| Item | Treatment to check |
|---|---|
| Paid-up equity and preference share capital | Start with legally issued, paid-up capital and reconcile legal records to financial presentation. |
| Securities premium, reserves from profits and retained earnings | Include qualifying amounts, counting each once. For statutory redemption reserves, trace the source before treating them as reserves created out of profits. |
| Revaluation, depreciation write-back and amalgamation reserves | Exclude the reserves expressly excluded by Section 2(57). |
| Translation or other OCI reserves | Do not assume every equity reserve is created out of profits. Check the origin and the statutory definition; a pure translation reserve of the kind in the example is not a profit-created reserve. |
| Accumulated losses and specified expenditure not written off | Apply the statutory deductions, without counting a debit P&L balance or the same item twice. |
Test group relationships directly
| Relationship | Standalone and group result |
|---|---|
| Qualifying Indian company with an Indian subsidiary, joint venture or associate | Apply the specified Rule 4 relationship to the other company even if it has little net worth, subject to applicable exceptions. |
| Qualifying Indian subsidiary with an Indian holding company | The holding company is covered by the direct link if the applicable clause includes it. |
| Another subsidiary of that holding company | The fellow subsidiary does not become subject to statutory Ind AS solely because the parent is covered through the first subsidiary. Check its own tests and any independent relationship; it may still supply Ind AS information for the parent’s consolidated accounts. |
| Overseas subsidiary, associate or joint venture of a qualifying Indian parent | Rule 4(5) permits local standalone financial statements under the relevant jurisdiction. The Indian parent prepares required consolidated statements under Ind AS, making necessary adjustments. |
| Indian company with a foreign parent | Rule 4(6) applies where the Indian company meets the Rule 4(1) criteria. A foreign parent’s reporting under IFRS does not alone trigger Indian statutory Ind AS. |
Check the statutory relationship, not just an equity percentage. A direct association or joint venture of a qualifying company differs from an investor for whom the qualifying company is an associate. ICAI’s ITFG guidance explains this distinction and the fellow-subsidiary case; its bulletin supports application of the notified rule.
Voluntary adoption and continued use
Rule 4(1)(i) permits voluntary adoption within its scope for accounting periods beginning on or after 1 April 2015, including the specified related companies; check separate NBFC and sector requirements. Rule 4(7)–(8) require consistency and make voluntary adoption irrevocable. Rule 4(9) requires continued reporting after adoption under Rule 4(1) even if the original criteria stop applying. Rule 4(3) is the provision about standalone and consolidated application.
Six worked illustrations
1. ₹302 crore of statutory net worth
Orion Polychem, an unlisted industrial company, first meets a threshold in its standalone audited accounts at 31 March 2024. Figures below are in ₹ crore; assume the preference capital is legally paid up and the ₹3 crore is qualifying expenditure not already reflected in the P&L figure.
| Item | Reported | Effect on statutory net worth |
|---|---|---|
| Paid-up equity capital | 50 | +50 |
| 9% redeemable paid-up preference capital, due 2028 | 20 | +20 |
| Securities premium | 80 | +80 |
| Profit-created general reserve | 110 | +110 |
| Credit P&L balance | 45 | +45 |
| Revaluation and amalgamation reserves | 40 and 15 | Excluded |
| Pure foreign translation reserve | 8 | Excluded on the stated facts |
| Accumulated losses and unwritten-off expenditure | 0 and 3 | −3 |
| Statutory net worth | — | 302 |
Incorrectly adding the revaluation and amalgamation reserves would give ₹357 crore; adding the translation reserve as well would give ₹365 crore. The correct ₹302 crore is within phase II. On the assumed first crossing, apply Ind AS from FY 2024–25 and prepare the applicable comparative information.
2. A small subsidiary of a parent that qualifies independently
Zenith Industrial, an unlisted industrial parent, has ₹320 crore in its applicable standalone audited accounts. It owns 100% of QuickLogistics, whose ₹10 lakh paid-up equity and ₹15 lakh qualifying retained earnings give ₹25 lakh net worth. Assuming no exclusion, the subsidiary is covered by its direct relationship to the independently qualifying parent; test the date under the rule and prepare its applicable standalone Ind AS financial statements.
3. SME listing and planned Main Board migration
MicroTech, with net worth of ₹45 crore, lists on BSE SME in September 2023. Assume it qualifies for the SME proviso and has not voluntarily adopted Ind AS. An October 2024 board decision to pursue migration does not by itself establish when the company meets the Rule 4 listing-in-process criterion. Verify the actual steps and applicable exchange and SEBI rules, and reassess when it is listed or in the process of listing outside the SME proviso. The ₹45 crore net worth does not prevent a listing trigger.
4. Qualifying subsidiary and a small parent
Apex Holding is an Indian unlisted company with ₹5 crore of standalone net worth and owns 60% of Apex Infrastructure, an independently qualifying unlisted industrial company with ₹280 crore in the relevant audited accounts. With the direct holding relationship established and no exception applicable, the parent applies Ind AS for its standalone and required consolidated statements. A sister company does not automatically cross the statutory threshold through the same parent.
5. A fall below the threshold after adoption
Assume Royal Hospitality first met the threshold at 31 March 2019 with ₹275 crore of net worth and was required to adopt Ind AS from FY 2019–20. Later losses of ₹150 crore reduce net worth to ₹125 crore, assuming no other changes. Rule 4(9) requires continuing Ind AS reporting.
6. Voluntary adoption before a proposed IPO
NextGen, an unlisted operating technology company with ₹180 crore of net worth, plans a draft prospectus in FY 2026–27. Assume it qualifies for voluntary adoption and elects FY 2024–25 as its first Ind AS reporting year. With one full comparative (FY 2023–24), its Ind AS 101 transition date is 1 April 2023. A prospectus filed with three completed financial years through 31 March 2026 would cover FY 2023–24, FY 2024–25 and FY 2025–26 under the stated assumptions. Work separately through Schedule VI of the SEBI ICDR Regulations and the relevant filing facts; voluntary adoption does not eliminate prospectus restatement work or establish a blanket Ind AS rule for all issuers.
Controls for the first reporting period
- Document the applicable rule, audited standalone net worth bridge, sector, dates and any listing status evidence.
- Record which entity independently qualifies, each relevant statutory relationship and what the group needs for consolidation.
- Set the first reporting date and comparative period. Plan the Ind AS 101 opening balance sheet, applicable exemptions and reconciliations, and assess the standards effective for that reporting period.
- Check applicable reporting and audit requirements for transition disclosures. Do not infer a universal annual auditor net worth certificate or prior-year disclosure solely from Rule 4.
Frequently asked questions
1. Does exactly ₹250 crore meet the unlisted phase II threshold?
Yes for an otherwise eligible company. Check the relevant standalone financial statements, timing and exclusions.
2. Do the Companies (Ind AS) Rules apply directly to LLPs or partnerships?
The corporate roadmap applies to companies within its scope. Determine the LLP or partnership’s own accounting framework separately; it may still need to provide Ind AS data for a corporate group.
3. Is a 22% stake conclusive?
Check total voting power, significant influence and whether the entity meets the statutory definition of an associate, excluding a subsidiary. If a qualifying Indian company directly holds an associate, the rule can cover the associate. A mere investor in the qualifying company is not automatically covered in the reverse direction.
4. How does a newly incorporated company determine its start date?
For a first net-worth trigger, use the first audited year-end in which the company meets the threshold and the next accounting year rule. A listing or qualifying group relationship may create a separate basis for earlier application; verify it on the facts.
5. Does an Indian branch or liaison office of a foreign entity adopt Ind AS under this roadmap?
Do not treat it as an Indian-incorporated company solely because it operates in India. Check foreign company filings under Section 381 and any sector or office-specific directions separately. A foreign portfolio investor is not covered merely because it invests in India.
6. Can an Indian subsidiary provide a group reporting package but use AS in its own accounts?
If the subsidiary itself is covered by Rule 4, a reporting package does not replace statutory Ind AS. If it is outside Rule 4, it may provide adjusted data to a group while applying its own statutory framework.
Sources
- Companies Act, 2013: Sections 2(6), 2(57), 133 and 381
- ICSI consolidated text: Companies (Indian Accounting Standards) Rules, 2015, Rule 4
- ICAI index of notified Companies (Indian Accounting Standards) Rules and amendments
- ICAI ITFG Bulletin 15 (revised), Issue 10: holding company, fellow subsidiary and investor
- SEBI ICDR Regulations, 2018, amended 21 March 2026: Schedule VI
- ICAI compendium containing the Gazette text of the 2016 Rule 4 amendment
- RBI circular of 22 March 2019 (copy of the issued circular): bank Ind AS deferral
- RBI Commercial Banks (Asset Classification, Provisioning and Income Recognition) Directions, 2026
- Gazette of India: IRDAI insurer finance regulations amendment, 2026
- IRDAI circular of 1 April 2026 (copy of the issued circular): parallel reporting and forbearance