Skip to content

Fundamentals of Financial and Cost Accounting · Four Frameworks of Accounting and Forms of Organization

Accounting Standards and Ind AS Framework in India

Updated 10 October 2026 · Fact-checked

Accounting standards are written policies that tell companies how to recognise, measure and disclose transactions so financial statements are uniform and comparable. In India, ICAI formulates them, NFRA examines and recommends them, and the Government notifies them. Ind AS are standards converged with IFRS, applicable by listing status and net worth. Others follow AS.

Understand Accounting Standards and Ind AS Framework

Imagine ten companies each valuing stock or recording revenue in their own way. You could never compare their profits. Accounting Standards (AS) solve this. They are written rules on how to recognise, measure, present and disclose items in financial statements.

In India, the Institute of Chartered Accountants of India (ICAI) formulates standards through its Accounting Standards Board and recommends them. The National Financial Reporting Authority (NFRA) examines these recommendations and recommends to the Central Government. The Central Government then prescribes and notifies the standards for companies under Section 133 of the Companies Act, 2013. AS are notified through the Companies (Accounting Standards) Rules. Ind AS are notified under the Companies (Indian Accounting Standards) Rules, 2015.

Objectives and benefits of standards: they bring uniformity, reduce the choices and alternative treatments, improve comparability across firms and years, increase reliability and credibility of statements, and help auditors, investors and regulators. They also add disclosure discipline.

Ind AS are Indian Accounting Standards converged with IFRS (International Financial Reporting Standards, issued by the IASB). Converged means they follow IFRS closely but with a few changes for Indian conditions. This is different from adoption, which would mean copying IFRS word for word. India chose convergence, not full adoption.

AS vs Ind AS in short: AS is the older, more rule-based Indian set (for example AS 1 to AS 29 in the numbering the company rules use). Ind AS is newer, closer to IFRS, and relies more on fair value and principle-based judgement. A company follows one set, not both. Which one depends on its category: listed or about-to-be-listed companies (other than those on SME exchanges) and large unlisted companies with net worth of ₹250 crore or more follow Ind AS, and the rest follow AS.

Key formulas to remember

Who frames standards
ICAI (ASB) formulates and recommends → NFRA examines and recommends to Central Government → Central Government notifies (Section 133, Companies Act, 2013)
For companies, standards have legal force only after Government notification.
Ind AS meaning
Ind AS = IFRS converged for Indian conditions
Convergence is not word-for-word adoption of IFRS.
Ind AS applicability (companies)
Listed or about-to-be-listed companies (other than SME exchange companies), and unlisted companies with net worth ≥ ₹250 crore → Ind AS (mandatory)
Holding, subsidiary, joint venture and associate companies of such companies also follow Ind AS. Companies listed or in the process of listing on SME exchanges are exempt. Companies not covered follow AS.
Ind AS voluntary adoption
Companies not covered by the mandatory rule may opt for Ind AS
Once a company opts in, it must continue to follow Ind AS and cannot go back to AS.
Core objectives
Uniformity + Comparability + Reliability + Disclosure
Use these four words to answer any objectives or benefits question.

How to solve Accounting Standards and Ind AS Framework questions

Questions here are mostly theory MCQs. Use the same short routine for each one.

  1. 1Read the stem and spot the keyword: who issues, what is Ind AS, applicability, objective, or difference.
  2. 2If it asks who, recall the chain: ICAI formulates and recommends, NFRA examines and recommends to the Government, the Government notifies.
  3. 3If it asks Ind AS or AS, ask whether the question is about IFRS convergence (Ind AS) or the older Indian standards (AS).
  4. 4For applicability, check whether the company is listed (and not on an SME exchange) and, if unlisted, its net worth against ₹250 crore.
  5. 5For objectives or benefits, look for uniformity, comparability, reliability and disclosure.
  6. 6Eliminate options with absolute words such as 'only', 'never' or 'all' unless they match a known rule.
  7. 7Pick the option that fits the exact wording and mark it. There is no negative marking, so never leave it blank.

Quickest way: Keyword matching for theory MCQs

When to use it: Use it for every one-line theory question on standards, Ind AS and IFRS convergence.

  1. Link 'IFRS' to Ind AS and convergence.
  2. Link 'formulates' to ICAI, 'examines and recommends to Government' to NFRA, and 'notifies' to the Central Government.
  3. Link 'comparability' and 'uniformity' to the purpose of standards.
  4. Link 'net worth ₹250 crore' to unlisted company applicability of Ind AS.
  5. Link 'SME exchange' to exemption from mandatory Ind AS.
  6. Drop options that mix up the roles of ICAI, NFRA and the Government.

Common mistakes in Accounting Standards and Ind AS Framework

  • Saying Ind AS is the same as IFRS

    Both are described as 'international' standards.

    Fix: Ind AS is converged with IFRS and carries some changes for India. It is not an identical copy.

  • Thinking ICAI notifies standards with legal force by itself

    ICAI writes the standards, so students assume it also enforces them.

    Fix: For companies, ICAI formulates and recommends, NFRA examines and recommends to the Central Government, and the Government notifies them.

  • Applying both AS and Ind AS to one company

    Students treat them as layers.

    Fix: A company follows one framework based on its category. Ind AS replaces AS for covered companies.

  • Believing every unlisted company must follow Ind AS

    The word 'listed' gets forgotten in applicability rules.

    Fix: Unlisted companies follow Ind AS mandatorily only if net worth is at least ₹250 crore, or if they are linked to a covered company. Others may opt in.

  • Believing every listed company must follow Ind AS

    The rule is remembered as 'listed means Ind AS' and the SME exemption is missed.

    Fix: Companies listed or in the process of listing on SME exchanges are exempt from mandatory Ind AS. Other listed or about-to-be-listed companies must follow it.

  • Thinking a company that opted for Ind AS can return to AS

    Voluntary sounds reversible.

    Fix: Once adopted, Ind AS must be followed in all later years.

Worked examples

Example 1

Which statement about Ind AS is correct?
A) They are identical word for word to IFRS
B) They are IFRS converged for Indian conditions
C) They apply only to banks
D) They replaced the Companies Act

Show the solution
  1. Ind AS stands for Indian Accounting Standards.
  2. India followed convergence, which keeps IFRS principles but allows carve-outs for local needs.
  3. Option A describes adoption, not convergence, so it is wrong.
  4. Options C and D are not true: Ind AS apply to companies by category, and they sit under the Act, not above it.

Answer: B

Example 2

Shree Textiles Ltd is an unlisted company with net worth of ₹300 crore and no holding or subsidiary links. Which framework must it follow?
A) AS only
B) Ind AS
C) Either, with free switching each year
D) Neither, as it is unlisted

Show the solution
  1. It is unlisted, so check net worth.
  2. Under the Rules, the ₹250 crore test is applied to the company's net worth as per its standalone financial statements.
  3. Net worth of ₹300 crore is above the ₹250 crore threshold.
  4. So Ind AS is mandatory for it.
  5. Free switching is not allowed, and being unlisted does not exempt it.

Answer: B

Exam tips

  • Memorise the chain: ICAI formulates and recommends, NFRA examines and recommends, Government notifies. Options often swap these roles.
  • Learn the ₹250 crore net worth threshold for unlisted companies in applicability questions.
  • Remember that SME exchange companies are exempt from mandatory Ind AS.
  • For difference questions, remember Ind AS is closer to IFRS and uses more fair value and judgement.
  • Objectives questions reward the words uniformity, comparability, reliability and disclosure.
  • Spend under a minute per theory MCQ and guess if unsure, since no negative marking applies.

Practice questions from Four Frameworks of Accounting and Forms of Organization

Accounting Standards and Ind AS Framework in other exams

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

Accounting Standards and Ind AS Framework: frequently asked questions

What is the difference between AS and Ind AS?

AS are the older Indian standards framed by ICAI. Ind AS are converged with IFRS and rely more on fair value and principle-based judgement. A company follows one set, depending on its category.

Is Ind AS the same as IFRS?

No. Ind AS are converged with IFRS, so they follow it closely but include changes to suit Indian laws and conditions. They are not a word-for-word copy.

Who issues accounting standards in India?

ICAI, through its Accounting Standards Board, formulates and recommends them. NFRA examines them and recommends to the Central Government, which notifies them for companies under Section 133 of the Companies Act, 2013.

Which companies must follow Ind AS?

Listed or about-to-be-listed companies (other than those on SME exchanges) and unlisted companies with net worth of at least ₹250 crore must follow Ind AS, along with their holding, subsidiary, joint venture and associate companies. Companies listed or in the process of listing on SME exchanges are exempt. Other companies follow AS, though they may opt for Ind AS.