- Accounting standards are authoritative rules for preparing financial statements
- In India there are three frameworks: the older Indian Accounting Standards (AS) issued by ICAI, the IFRS-converged Ind AS (40 standards notified by the MCA under the Companies Act 2013), and the international IFRS issued by the IASB and used in 140-plus countries
- Which one applies depends on a company's size, listing and turnover.
What Are Accounting Standards?
Accounting standards are authoritative written rules that govern how companies record transactions and prepare financial statements. They make financial reports consistent, reliable and comparable across companies and over time. By standardising how revenue, assets, costs and disclosures are reported, they help investors, regulators and lenders trust and compare a company's accounts.
Without common standards, every company could present its finances differently, making comparison impossible. Standards are set by recognised bodies - in India by the Institute of Chartered Accountants of India (ICAI) and the Ministry of Corporate Affairs (MCA), and internationally by the International Accounting Standards Board (IASB) - and are often backed by company law.
What Are the Types of Accounting Standards in India?
India uses three frameworks. Indian Accounting Standards (AS), the older ICAI framework, are rule-based and used by smaller entities. Ind AS are 40 IFRS-converged standards notified by the MCA under the Companies Act 2013 for listed and large companies. IFRS are the global standards issued by the IASB, on which Ind AS is based but not identical.
| Framework (2026) | Issued / Notified By | Used By |
|---|---|---|
| Indian AS (AS 1-29) | ICAI | Smaller / non-Ind AS companies |
| Ind AS (40 standards) | MCA (IFRS-converged) | Listed & large companies |
| IFRS / IAS | IASB (global) | 140+ countries worldwide |
What Is the Difference Between Ind AS and IFRS?
Ind AS are India's accounting standards, converged with but not identical to IFRS. They are named and numbered like IFRS but include carve-outs where Indian law requires different treatment, such as on financial instruments and fair value. IFRS are issued globally by the IASB; India chose convergence rather than direct adoption.
Each Ind AS carries an appendix listing the major differences from its corresponding IFRS standard. The older Indian AS framework was more India-specific and relied more on historical cost, while Ind AS is more principle-based and emphasises fair value and transparency, improving comparability with global financial statements.
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In India, all companies must follow accounting standards when preparing their financial statements under the Companies Act 2013. Listed companies and large unlisted companies above notified turnover and net-worth thresholds must apply Ind AS, while smaller companies and non-corporate entities follow the older ICAI AS framework. The applicable standard depends on size, listing status and turnover.
Compliance is a legal requirement, not optional - Section 129 of the Companies Act 2013 requires financial statements to comply with the notified accounting standards. A company below the Ind AS thresholds may still adopt Ind AS voluntarily, subject to the notified rules, but cannot then revert freely.
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