Must‑Know Guide: India’s Financial Reporting Standards (2025 Update)
- Introduction to Financial Reporting Standards
- Ind AS as India’s IFRS-Compatible Standard
- Regulatory Oversight: ICAI, NFRA, MCA
- Ind AS Adoption Timeline
- IFRS vs Ind AS – Key Differences
- Latest Update – Non-Corporate Entity Reporting (2024)
- Stakeholder Impact and Benefits
- Compliance Best Practices
- FAQs
- Conclusion
Introduction to Financial Reporting Standards
India’s financial reporting landscape is undergoing critical changes in 2025. With evolving compliance norms, stricter oversight by bodies like ICAI, NFRA, and MCA, and new guidelines for non-corporate entities, staying updated is more important than ever for CA students, finance professionals, and business owners.
Ind AS as India’s IFRS-Compatible Standard
India converged with the International Financial Reporting Standards (IFRS) by developing its own version—Indian Accounting Standards (Ind AS). While aligned in spirit, Ind AS includes several “carve-outs” to suit India’s economic and legal environment.
Ind AS aims to enhance transparency, comparability, and global integration of financial statements. For CA professionals, mastering Ind AS is not optional—it’s foundational.
Regulatory Oversight: ICAI, NFRA, MCA
Three key authorities shape India’s financial reporting regime:
ICAI (Institute of Chartered Accountants of India): Issues and updates Ind AS, provides training, and guides implementation.
NFRA (National Financial Reporting Authority): Regulates accounting and auditing standards, particularly for listed and large unlisted companies.
MCA (Ministry of Corporate Affairs): Enforces legal compliance and coordinates with ICAI and NFRA.
Ind AS Adoption Timeline
Understanding the phased rollout of Ind AS helps clarify who needs to comply and when.
Voluntary Adoption from 2015
Ind AS was initially offered for voluntary adoption by companies from April 1, 2015. This gave early adopters time to prepare for broader mandates.
Mandatory Rollout for Large Firms (2016–17)
By 2016–17, Ind AS became mandatory for companies with:
Net worth ≥ ₹500 crore
Listed or planning to list on Indian/foreign stock exchanges
This phase ensured consistency in reporting among large corporations.
Sector-Specific Rules (Banks, NBFCs, Insurance)
Banks: Mandated to adopt Ind AS starting 2019–20 (though timelines have seen regulatory pauses).
NBFCs and Insurance Companies: Gradual implementation under the oversight of the RBI and IRDAI.
These staggered timelines underscore the need for sector-specific Ind AS expertise.
IFRS vs Ind AS – Key Differences
Presentation, Disclosures, Fair Value, Carve-Outs
While Ind AS and IFRS share a base, key differences include:
| Area | IFRS | Ind AS (India-specific) |
|---|---|---|
| Presentation | Flexible formats | MCA-prescribed formats |
| Carve-Outs | None | Adjusted for Indian legal/tax frameworks |
| Fair Valuation | More aggressive fair value use | Conservative approach |
| Revenue Recognition | IFRS 15 directly | Ind AS 115 (slightly adapted) |
Latest Update – Non-Corporate Entity Reporting (2024)
ICAI’s Standardized Format Mandates
From April 1, 2024, ICAI mandated a uniform format for proprietorships, partnerships, and other non-corporate entities, ensuring more structured and comparable reporting. This is a landmark shift for India’s informal sector.
Key features include:
Prescribed structure for balance sheets and P&L accounts
Uniform classification of assets/liabilities
Enhanced disclosure norms
Benefits, Compliance Challenges & Timelines
Benefits:
Greater transparency
Easier bank loan approvals
Improved investor and tax authority confidence
Challenges:
Training requirements for accountants
Software and process upgrades
Risk of non-compliance due to unfamiliarity
This reform will particularly impact SMEs and local CA firms, demanding greater standardization in accounting practices.
Stakeholder Impact and Benefits
Transparency, Governance & Investor Trust
The push for standardisation under Ind AS boosts:
Investor confidence
Corporate governance
International funding prospects
Companies reporting under Ind AS often enjoy better credit ratings and market valuations due to improved financial clarity.
SME Challenges & Training Needs
For SMEs, the cost of Ind AS adoption—training, system upgrades, consulting—can be high. But ignoring the shift risks falling behind.
ICAI offers training modules, and many firms now specialise in helping SMEs transition smoothly.
Compliance Best Practices
CA and Finance Team Readiness Tips
Conduct internal Ind AS readiness assessments
Invest in updated ERP/accounting systems
Attend ICAI/industry training programs
Prepare documentation in advance of audits
Use of FAQs, ICAI Resources, and Tech Tools
Follow ICAI’s Ind AS FAQ documents
Leverage NFRA’s audit inspection guides
Use software tools like Tally, SAP, and cloud-based solutions for compliance automation
FAQs
What’s the difference between IFRS and Ind AS?
Ind AS is India’s version of IFRS, tailored with local carve-outs. While both aim for transparency and comparability, Ind AS includes legal and tax-specific adjustments.
When do proprietorships need to file under the new format?
From April 1, 2024, as per ICAI’s guidelines, non-corporate entities must use a standardized reporting format for all financial statements.
Is Ind AS mandatory for SMEs?
Currently, Ind AS is mandatory only for certain companies based on size or listing status. SMEs may still follow existing Indian GAAP unless voluntarily opting in.
What is NFRA’s role in financial reporting?
NFRA oversees audit and accounting standards enforcement, especially for listed companies and large entities, enhancing independence and transparency.
How can I prepare for Ind AS compliance in 2025?
Stay updated via ICAI bulletins, attend training workshops, upgrade your financial systems, and consult with qualified experts.
Conclusion
Ind AS and India’s evolving financial reporting standards are no longer optional knowledge for finance professionals—they are essential. With the 2024 reforms for non-corporate entities and tighter scrutiny from NFRA, CAs and accountants must step up with practical skills, awareness, and readiness.