New accounting norms to have minimum number of ‘carve outs’

NEW DELHI: Gearing up to implement the new set of accounting standards that are converged with global norms, the government is likely to keep the number of “carve outs” to the minimum.

Carve outs are put in place after taking into consideration the differences in application of accounting principles and prevailing economic conditions.

The notifications for implementation of the Indian Accounting Standards (Ind AS), for which the government came with a road map earlier this month, is expected soon.

Ind AS are converged with International Financial Reporting Standards (IFRS).

Sources said that “carve outs” in Ind AS would be kept at the minimum but did not provide specific details.

The “carve outs” would be there in the interest of industry and the nation as a whole, they added.

According to sources, the notifications related to Ind AS would be issued soon and in this financial year.

The new Ind AS road map, prepared after holding extensive consultations with stakeholders and regulators, exempts banking, insurance and non-banking finance companies.

Corporate Affairs Ministry, which would be the nodal point for implementation of the new accounting norms, has said that Ind AS would be applicable on a voluntary basis from April 1 this year, and compulsory from April 1, 2016.

Companies with a net worth of Rs 500 crore or more would have to mandatorily follow the new accounting norms that are converged with global standards from April next year.

Those having a net worth of less than Rs 500 crore but are listed or in the process of getting listed would have to compulsorily follow the new norms from April 1, 2017.

Ind AS would be mandatory from April 1, 2017, for companies — whose equity and/or debt securities are listed or are in the process of being listed within India or outside — having a net worth of less than Rs 500 crore.

Other companies, which are unlisted having a networth of Rs 250 crore or more but less than Rs 500 crore, also would have to start implementing Ind AS from April 1, 2017.

Holding, subsidiary, joint venture or associate companies of these entities would have to comply with this deadline.

Companies whose securities are listed or in the process of listing on SME exchanges would not be required to implement Ind AS.