In his first budget speech, the newly appointed Indian Minister of Finance (MoF) Arun Jaitley has called for mandatory adoption of Indian accounting standards (Ind AS) converged with International Financial Reporting Standards (IFRS) by financial year 2016-2017.

Jaitley’s announcement answered the Indian accounting profession call for a governmental decision on IFRS convergence to be taken after the general election of April and May.

Talking to The Accountant in March, the Institute of Chartered Accountants of India (ICAI) president K Raghu said: "We are ready with the new standards. We are just waiting for the government to announce the day. We have elections coming up. The new government would ask us for our feedback as accounting regulators and then it will take a final decision on the recommendations we give."

The decision came last week, when giving his first budget speech as Jaitley said: "I propose for adoption of the new Ind AS by the Indian companies from the financial year 2015-16 voluntarily and from the financial year 2016-17 on a mandatory basis."

The regulators will separately notify the date of implementation of Ind AS for the banks and insurance companies. Standards for the computation of tax would be notified separately, he continued.

Jaitley’s announcement bring closer to completion the process of convergence with IFRS started in 2010. At that time the Indian government had initially agreed on the adoption of converged standards by 2011, but the transition period was subsequently postponed.

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In 2011, the Indian Ministry of Corporate Affairs issued 35 Ind AS converged with IFRS but didn’t announced implementation dates.
Ind AS are based on IFRS but include some changes which are noted in the appendix to each standard.

"ICAI supports converged standards, rather than adoption of IFRS. In that respect, Ind AS have certain adjustments to reflect the country’s peculiarities," Raghu explained. "India is a peculiar, big country with lots of corporates. It would be a huge impact if we went for full adoption."

Raghu welcomed the MoF’s announcement and said: "ICAI has always propagated the need to converge with IFRS at the earliest to bring the financial reporting practices of the Indian corporates at par with the global standards which are used in more than one hundred countries."

This would also enable India to fulfil its G-20 commitments in this regard, he continued. "ICAI has already finalised the Ind AS in accordance with the corresponding IFRS effective as of this date. The new/amended Ind As converged with IFRS will be examined by the relevant authorities of the ministry of corporate affairs before being notified under the Companies Act 2013."

India to pass IFRS convergence after election