Ind AS, and where it differs from IFRS
Converged is not identical. The deliberate departures are called carve-outs, each has a stated reason rooted in Indian conditions, and knowing they exist is what makes a cross-border comparison honest.
Chapter 13 · Advanced
Indian Accounting Standards are converged with IFRS. That word is doing real work: it means aligned deliberately, not copied.
How they came about
The Ministry of Corporate Affairs notified Ind AS as the Companies (Indian Accounting Standards) Rules, 2015 under the Companies Act 2013, and they have been amended since. ICAI develops the standards and publishes the educational material behind them.
Two consequences follow from the mechanism. Ind AS has legal force — it is subordinate legislation under an Act, not professional guidance. And because they are issued under the Companies Act, they apply to companies incorporated under that Act, which is why some IFRS standards have no Ind AS equivalent at all.
ICAI gives an example: no Ind AS corresponding to IAS 26, Accounting and Reporting by Retirement Benefit Plans, because that standard is not applicable to companies.
What a carve-out is
A carve-out is a deliberate departure from IFRS in the corresponding Ind AS. ICAI groups them as differences arising from the application of accounting principles and practices and the economic conditions prevailing in India.
They are documented, with the reason stated. That is the important part: a carve-out is a decision somebody published an argument for, not a divergence that happened.
A worked example
Ind AS 1, Presentation of Financial Statements, on a breached loan covenant.
Under IFRS. IAS 1 requires that where a condition of a loan agreement classified as non-current is breached at the reporting date, the liability is classified as current — even if the breach is rectified after the balance sheet date.
The Ind AS carve-out. Ind AS 1 clarifies that where a material provision of a long-term loan arrangement is breached on or before the end of the reporting period, with the effect that the liability becomes payable on demand, the entity does not classify it as current if the lender agreed — after the reporting period but before the financial statements are approved for issue — not to demand payment as a consequence of the breach.
The reason ICAI gives. Under the Indian banking system a long-term loan agreement generally contains a large number of conditions, some substantive and some not, and a technical breach of a minor one being rectified shortly afterwards does not mean the debt is genuinely repayable on demand.
Why this matters to a reader: the same loan, same covenant, same rectification, appears as current debt under IFRS and non-current under Ind AS. Every liquidity ratio built on the current/non-current split changes. Nothing about the company changed.
What this means for comparison
The problem asks for two checks before comparing an Indian and a European company.
Read both accounting policy notes. The carve-outs are the documented differences, and the policy note is where a company states which treatments it applies.
Check the choices the standards permit on both sides. This is the one that is not a carve-out. Both frameworks allow genuine policy choices — inventory cost formula, depreciation method, the cost or revaluation model — so two companies can differ materially while both complying fully with the same standard. Chapter 8 showed how far depreciation policy alone can move reported profit.
A third, worth adding: check the reporting period. Indian companies report to 31 March, following the financial year in the Companies Act; many European companies report to 31 December. Comparing a year that includes a shock with one that does not is a different problem from accounting policy, and it is easier to miss.
The honest summary
Convergence makes Indian accounts legible to a reader who knows IFRS, which is most of the benefit. It does not make them identical, and the places where they are not are written down with reasons.
The practical rule: comparisons across frameworks need the policy notes, not just the numbers. That is also true of comparisons within a framework, for the reasons in chapters 7 and 8 — the cross-border case is only the obvious one.
The point
Ind AS is converged with IFRS, notified by MCA as rules under the Companies Act 2013, which gives it legal force and limits it to companies. Carve-outs are deliberate, documented departures justified by Indian conditions — the loan covenant case means an identical breach produces current debt under IFRS and non-current under Ind AS. Comparing across frameworks requires reading both policy notes, because permitted choices within a single standard can matter as much as the differences between two.
Check yourself
4 questions. Every answer is explained afterwards, including the ones you get right — guessing correctly is not the same as knowing. Score 70% or more and the chapter is marked done.
Question 1 of 4
0 of 4 answered. You can submit with questions unanswered — they simply score zero.
Now do it with your own numbers
An Indian company and a European competitor report under Ind AS and IFRS respectively. Name two things you would check before treating their reported profits as comparable.
Start with the accounting policy notes rather than the numbers. One of the two things is not a carve-out at all but a choice both standards permit.