A website budget is not one capitalisable asset balance
Ind AS 38 Appendix A applies to an entity’s own developed website for internal or external access. Recognition requires the stated general and development criteria, not merely a completed site or an outsourced invoice. A website developed solely or primarily to promote the entity’s own products and services is expensed under the Appendix’s stated conclusion. This guide checks ICAI’s 2025–26 compendium on 27 October 2026 and addresses own-use sites, not websites developed for sale to customers. ICAI Ind AS 38: Appendix A, Web Site Costs.
Classify the work by activity and stage
Appendix A distinguishes planning, application and infrastructure development, graphical design, content development and operation. Planning is expensed. Directly attributable, necessary development activities can enter the cost of a qualifying recognised website, subject to the full recognition criteria. Split a supplier’s lump-sum contract using supportable deliverables rather than capitalising every invoice under the heading website development. ICAI Ind AS 38: Appendix A, Web Site Costs.
Separate commercial functionality from promotional content
A website capable of enabling orders may help demonstrate future economic benefits, but that fact does not automatically satisfy every development criterion. Content advertising or promoting the entity’s products and services, including specified product photography, is expensed as the services are received. Non-promotional content necessary to a qualifying site requires its own directly attributable cost assessment. ICAI Ind AS 38: Appendix A, Web Site Costs.
Keep hardware, hosting and operations distinct
Appendix A excludes the stated website hardware expenditure from its own scope and points to Ind AS 16. Hosting services are expensed when received; a payment made before receipt is not automatically a development cost. Once development is complete, operating expenditure is expensed unless it independently meets the referenced recognition criteria. Routine maintenance should not be relabelled enhancement merely to enlarge the asset. ICAI Ind AS 38: Appendix A, Web Site Costs.
Retain the recognition and readiness evidence
Document the business purpose, technical and financial support, identifiable cost streams and point at which the site is capable of intended operation. Previously expensed amounts are not reinstated just because the project later succeeds. A recognised website is subsequently measured under the applicable Ind AS 38 requirements, and Appendix A says its best-estimate useful life should be short; it supplies no universal number of years. The examples assume any expressly qualifying development criteria are independently established and exclude amortisation and tax. ICAI Ind AS 38: Appendix A, Web Site Costs.
Applicable primary references
ICAI Ind AS 38: Appendix A, Web Site Costs
Six worked illustrations
All facts and amounts below are fictional. Assumptions describe the model, not additional statutory rules.
Illustrative example 1: Split a transaction-capable site budget
Assume application development ₹12 lakh, graphical design ₹4 lakh and necessary non-promotional content ₹3 lakh independently qualify. Those costs total ₹19 lakh. Planning ₹2 lakh and promotional content ₹5 lakh are expensed, totalling ₹7 lakh. Total analysed expenditure is ₹26 lakh; do not capitalise the entire budget.
Illustrative example 2: A primarily promotional site
A site developed primarily to advertise the entity’s products costs ₹9 lakh, comprising design ₹4 lakh and promotional content ₹5 lakh. On the stated Appendix A facts, expense ₹9 lakh. The existence of attractive graphical design does not create a separate automatic ₹4 lakh capitalisation entitlement.
Illustrative example 3: Hosting paid before service receipt
Assume ₹1.2 lakh is paid for twelve equal months of hosting and three months have been received by the reporting date. Service expense is ₹0.3 lakh and the unreceived-service prepayment ₹0.9 lakh, on these assumptions. Neither is website-development asset cost merely because the provider also developed the site.
Illustrative example 4: Hardware is a separate assessment
A project includes website development ₹20 lakh assumed qualifying, server hardware ₹8 lakh and planning ₹2 lakh. The website cost population is ₹20 lakh; hardware ₹8 lakh is assessed under its applicable standard and planning ₹2 lakh expensed. The ₹30 lakh project total is not all one Ind AS 38 website asset.
Illustrative example 5: Routine operation and a separately qualifying enhancement
After completion, routine maintenance costs ₹3 lakh. Assume a distinct ₹6 lakh enhancement independently satisfies the applicable recognition requirements. Expense the ₹3 lakh and separately assess and recognise the supported ₹6 lakh addition. The model does not capitalise every ₹9 lakh post-launch spend.
Illustrative example 6: Do not reinstate an old planning expense
Planning ₹2 lakh was expensed in earlier financial statements. Later qualifying development costs are ₹10 lakh. On the stated facts, new asset cost is ₹10 lakh, not ₹12 lakh. Preserve the original expense history rather than reclassifying it because the site is now successful.
Ten-step verification table
| Step | Action | Evidence |
|---|---|---|
| 1 | Identify the website purpose | Own use versus development for sale |
| 2 | Assess the recognition criteria | General and development evidence |
| 3 | Split expenditure by stage | Planning through operation |
| 4 | Identify directly attributable development | Deliverables and cost records |
| 5 | Separate promotional content | Advertising and photography evidence |
| 6 | Separate hardware | Applicable asset-standard assessment |
| 7 | Allocate hosting by services received | Expense and prepayment working |
| 8 | Review post-launch expenditure | Maintenance versus qualifying addition |
| 9 | Exclude prior expensed amounts | Recognition history |
| 10 | Document readiness and subsequent measurement | Useful life and closing asset working |
Sixteen practitioner FAQs
1. Does every completed website qualify as an intangible asset?
No. The Appendix requires the stated recognition criteria to be met.
2. Does outsourcing remove those criteria?
No. Analyse the entity’s own website and underlying activities rather than the invoice label.
3. Is planning expenditure capitalised?
Appendix A treats planning as similar to research and expenses it when incurred.
4. Can transaction functionality support future benefits?
It can help demonstrate them, but every relevant development criterion still needs assessment.
5. Is a primarily promotional website treated the same as a qualifying transaction site?
The Appendix requires expense recognition for its stated solely or primarily promotional website case.
6. Can graphical-design spending always be capitalised separately?
No. Apply the recognition conditions and the website’s purpose.
7. How is promotional content treated?
It is expensed when incurred in accordance with the stated requirements, including as relevant services are received.
8. Can necessary non-promotional content form part of cost?
It can, where the qualifying website and directly attributable requirements are met.
9. Is server hardware governed by this Appendix?
The stated hardware expenditure is excluded and assessed under the applicable hardware standard.
10. Are hosting fees automatically website asset costs?
No. Hosting services are expensed as received under the Appendix’s treatment.
11. Can unreceived hosting services remain prepaid?
On appropriate facts, distinguish the prepayment from services already received rather than calling it website-development cost.
12. Does routine maintenance become an asset after launch?
Operating expenditure is expensed unless it independently meets the applicable recognition criteria.
13. Can a genuine enhancement qualify?
Assess its own recognition basis and directly attributable cost evidence.
14. Can previously expensed planning be reinstated later?
No. Do not reverse expense history merely because the website later succeeds.
15. Does the Appendix prescribe a universal useful life in years?
No. It says the best estimate should be short; determine the appropriate life on the actual facts.
16. Do the illustrations calculate amortisation or tax?
No. They isolate expenditure classification and assume expressly stated recognition conditions are established.
Conclusion
Classify own-website costs under Ind AS 38 Appendix A, separating eligible development from planning, promotional content, hosting and routine operation.