Financial Reporting · Introduction to Indian Accounting Standards

Ind AS Framework and Convergence with IFRS

Updated 5 October 2026 · Fact-checked

Ind AS are Indian Accounting Standards notified by the MCA under Section 133 of the Companies Act, 2013, after drafting by ICAI's ASB and recommendation by NFRA. They are converged with IFRS, not copied. To answer questions, state the roadmap, name the body, then explain each difference as a carve-out, carve-in or timing change.

Understand Ind AS Framework and Convergence with IFRS

Ind AS are India's accounting standards that are based on IFRS issued by the IASB. India chose convergence, not word-for-word adoption. This means each Ind AS follows the matching IFRS or IAS, but changes are made where Indian law, economy or conditions need it.

Three bodies matter. The Accounting Standards Board (ASB) of ICAI studies IFRS, formulates the draft Ind AS and submits them to NFRA. Section 132 of the Companies Act, 2013 empowers the Central Government to constitute the National Financial Reporting Authority (NFRA), which recommends accounting and auditing policies and standards. Earlier, the National Advisory Committee on Accounting Standards (NACAS) did this. The Ministry of Corporate Affairs (MCA) finally notifies the standards under Section 133 of the Companies Act, 2013, read with the Companies (Indian Accounting Standards) Rules, 2015. A standard has legal force only after MCA notifies it.

Accounting Standards (AS) are notified under the Companies (Accounting Standards) Rules, 2006 and continue to apply to companies not covered by Ind AS. They are not converged with IFRS in the same way. Companies move to Ind AS in phases, based on net worth and listing status. The details of who must apply are in the applicability topic. Once a company falls under Ind AS, it must apply all Ind AS. It cannot mix Ind AS and AS.

The differences from IFRS come in three kinds. A carve-out is a change that departs from the IFRS option or requirement, so Ind AS says something different. A carve-in is an addition to Ind AS that IFRS does not contain. The third kind is other changes in terminology or presentation, such as the format needed to follow Schedule III (Division II). Carve-outs are the main cause of non-compliance with IFRS. Carve-ins and presentation requirements, such as Schedule III, may also lead to differences from IFRS. Only pure changes in terminology are generally harmless. So Ind AS compliance does not guarantee IFRS compliance, and an Ind AS company cannot claim IFRS compliance just by following Ind AS.

For exams, learn the logic first. Ind AS exist to give global comparability. Carve-outs exist because a direct IFRS adoption would clash with Indian law or practice. Then attach one or two well-known examples to this logic. Each standard topic in your syllabus ends with its own differences from IFRS, so this page gives you the frame to hang them on.

Key rules to remember

Route of a standard: IFRS/IAS → ASB of ICAI formulates draft Ind AS and submits them to NFRA (earlier NACAS) → NFRA recommends to the MCA → MCA notifies under Section 133 of the Companies Act, 2013, read with the Companies (Indian Accounting Standards) Rules, 2015; Notification by MCA gives legal force. Say this in any question on who issues Ind AS.
Convergence, not adoption: Ind AS = IFRS + carve-outs + carve-ins (+ minor wording changes); A memory aid for the idea. It is not a numerical formula.
Carve-out: Carve-out = Ind AS departs from, or removes an option in, the IFRS requirement; Reason is usually Indian law, economic conditions or practice.
Carve-in: Carve-in = Ind AS adds a requirement or guidance not in IFRS; Often to suit Indian law or to give extra clarity.
All-or-nothing rule: Entity covered by Ind AS applies all Ind AS, and Ind AS only; Applicability depends on the Rules, covered in the applicability topic.

How to solve Ind AS Framework and Convergence with IFRS questions

Use this order for any question on the framework, roadmap or IFRS differences.

1Read what is asked: roadmap, role of a body, or a difference from IFRS.
2For a role question, name the body and its function: ASB of ICAI formulates draft Ind AS and submits them to NFRA, NFRA recommends them to the MCA, MCA notifies under Section 133 of the Companies Act, 2013.
3For a roadmap question, state that Ind AS apply in phases by net worth and listing status, and that applicability sits in the Rules.
4For a difference question, define the term first: carve-out, carve-in or other change in terminology or presentation.
5Give the specific Ind AS and the specific difference. Say what IFRS requires and what Ind AS requires.
6Add the reason for the difference, such as Indian law or practice.
7Conclude with the effect: the entity may be Ind AS compliant but not fully IFRS compliant, mainly where a carve-out applies, and also where a carve-in or presentation requirement differs from IFRS.

Quickest way: Three-line answer pattern

When to use it: Use when time is short, especially for 2 to 4 mark written questions.

Line 1: define the term (convergence, carve-out or carve-in) in one sentence.
Line 2: give the example or the body's role with the exact standard named.
Line 3: write the conclusion on IFRS compliance or legal force of MCA notification.

Common mistakes in Ind AS Framework and Convergence with IFRS

Saying ICAI notifies Ind AS.
ICAI issues the AS and study material, so students link it to everything.
Fix: Write: ASB of ICAI formulates draft Ind AS and submits them to NFRA, NFRA recommends them to the MCA, MCA notifies.
Saying Ind AS are identical to IFRS.
Ind AS are described as IFRS-based.
Fix: Say Ind AS are converged, with carve-outs and carve-ins, so they are not word-for-word IFRS.
Mixing up carve-out and carve-in.
Both terms sound similar and are learnt together.
Fix: Carve-out means removal or departure from IFRS. Carve-in means addition to IFRS. Write one example for each.
Using the AS in an Ind AS answer.
Students remember AS numbers from earlier levels.
Fix: Quote Ind AS numbers only in FR answers. Use AS only when the question compares AS and Ind AS.
Assuming a company can choose some Ind AS and keep some AS.
Students confuse it with voluntary early adoption.
Fix: State that once covered, a company applies the full set of Ind AS.

Worked examples

Example 1

Case: Zenith Ltd's CFO tells the board, 'Since we follow Ind AS, our financial statements automatically comply with IFRS as issued by the IASB.' Comment.

Show the solution

Ind AS are converged with IFRS, not adopted word-for-word.
Carve-outs and carve-ins exist, where Ind AS departs from or adds to IFRS. Presentation requirements such as Schedule III can also differ from IFRS.
Where such a difference applies, following Ind AS gives a different treatment than IFRS.
So Ind AS compliance does not by itself ensure full IFRS compliance.

Answer: The CFO's statement is not correct. Ind AS are converged with IFRS but contain carve-outs, which depart from IFRS, and carve-ins and presentation requirements that may also differ, so an Ind AS compliant entity may not be fully IFRS compliant.

Example 2

Case: A student says, 'ICAI's Accounting Standards Board issues Ind AS, and a company must apply them from that date.' Identify what is wrong and state the correct process.

Show the solution

ASB of ICAI formulates draft Ind AS after studying IFRS and submits them to NFRA. It does not make them binding.
NFRA recommends the standards to the MCA. Earlier, NACAS did this. NFRA is constituted by the Central Government under Section 132 of the Companies Act, 2013.
The MCA notifies them under Section 133 of the Companies Act, 2013, read with the Companies (Indian Accounting Standards) Rules, 2015.
A company must apply Ind AS only if it is covered by the applicability criteria in the Rules, and from the date those Rules require.

Answer: The statement is wrong. ASB formulates drafts and submits them to NFRA, NFRA recommends them to the MCA, and MCA notifies them. Ind AS become binding only through MCA notification and only for companies covered by the Rules.

Exam tips

Start every answer on this topic with the correct body and its role. Examiners check this first.
Learn two or three carve-out examples in each major standard from the differences sections. Case scenarios often hide one.
Keep the terms 'convergence' and 'adoption' separate. Using them loosely loses marks.
In MCQs, watch for options that say ICAI notifies Ind AS or that Ind AS equal IFRS. Both are wrong.
Connect this page with the applicability topic. Roadmap questions often ask who must apply Ind AS.

Practice questions from Introduction to Indian Accounting Standards

Ind AS Framework and Convergence with IFRS in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Ind AS Framework and Convergence with IFRS: frequently asked questions

What is the difference between convergence and adoption of IFRS?

Adoption means taking IFRS as issued, word for word. Convergence means basing Indian standards on IFRS but changing them where needed for Indian conditions. India follows convergence through Ind AS.

What are carve-outs and carve-ins in Ind AS?

A carve-out is a departure from IFRS, where Ind AS removes an option or requires something different. A carve-in is an addition that IFRS does not have. Both are described in the differences part of each Ind AS.

Who notifies Ind AS in India?

The Ministry of Corporate Affairs notifies them under Section 133 of the Companies Act, 2013, read with the Companies (Indian Accounting Standards) Rules, 2015. The ASB of ICAI formulates the drafts and submits them to NFRA, which recommends them to the MCA.

How should I study this introduction for CA Final FR?

Learn the roles of ASB, NFRA and MCA first, then the meaning of carve-out and carve-in. Then read the differences from IFRS at the end of each standard and note one example each. Revise them together with applicability.