# Ind AS Applicability for a Foreign Owned Private Company in 2026

> Source: https://krystal7.com/insights/ind-as-applicability-private-companies-foreign-subsidiary
> Publisher: Krystal7 Consultants (Krystal7 Innovations Private Limited), Gurugram, India
> Author: CA Nandini
> Published: 13 Feb 2026; updated 24 Oct 2026
> Summary: An unlisted Indian subsidiary moves to Ind AS at INR 250 crore net worth or through an Indian group link. A parent's IFRS reporting never triggers it.

*Written by CA Nandini Hasija, Krystal7 Consultants. Last updated 23 October 2026.*

## AI Overview Summary

- Under rule 4 of the Companies (Indian Accounting Standards) Rules, 2015, an unlisted company must use Ind AS once its net worth reaches INR 250 crore, from the next financial year.
- A foreign parent's size or IFRS reporting never pulls its Indian subsidiary onto Ind AS. Rule 4(6) applies Ind AS only if the Indian company meets the criteria itself.
- An Indian company must also use Ind AS if it is listed other than on an SME exchange, or is the holding company, subsidiary, joint venture or associate of a covered Indian company.
- Any company may adopt Ind AS voluntarily under rule 4(1)(i), but the choice is irrevocable under rule 4(8) and binds all later years under rule 4(9).
- Ind AS is close to IFRS but has carve outs, so an Indian subsidiary on Ind AS still sends its parent an IFRS pack with adjustments, prepared to a 31 March statutory year.

**Ind AS applicability is set by rule 4 of the Companies (Indian Accounting Standards) Rules, 2015. An unlisted Indian company must move to Ind AS once its own net worth reaches INR 250 crore, from the next financial year. A listed company, or the Indian holding company, subsidiary, joint venture or associate of a company that the rule covers, must also move. A foreign parent's size or IFRS reporting does not count.**

This page is for foreign parents and the finance leads of their Indian subsidiaries. It covers the thresholds, the group company rule and voluntary adoption. It then covers the IFRS differences that matter for group packs, first time adoption and a decision table. INR 1 crore is 10 million.

## What is the Ind AS applicability test for a private company?

An Indian Private Limited company must apply Ind AS if any one of three tests is met. Its own net worth reaches INR 250 crore. Its equity or debt securities are listed or being listed, other than on an SME exchange. Or it is the holding company, subsidiary, joint venture or associate of an Indian company caught by the first two tests.

Rule 4 of the [Companies (Indian Accounting Standards) Rules, 2015](https://thc.nic.in/Central%20Governmental%20Rules/Companies%20(Indian%20Accounting%20Standards)%20Rules,2015.pdf) (the Ind AS Rules) sets the roadmap. The Central Government notified the rules on 16 Feb 2015 under section 133 of the Companies Act, 2013. The roadmap ran in two phases, and both phases are now in force.

| Rule | Who is covered | Net worth test | Ind AS from |
|---|---|---|---|
| 4(1)(i) | Any company, by choice | None | Accounting periods from 1 Apr 2015 |
| 4(1)(ii)(a) | Companies with equity or debt securities listed, or being listed, in India or abroad | INR 500 crore or more | 1 Apr 2016 |
| 4(1)(ii)(b) | Unlisted companies | INR 500 crore or more | 1 Apr 2016 |
| 4(1)(ii)(c) | Holding, subsidiary, joint venture or associate companies of the above | None of its own | 1 Apr 2016 |
| 4(1)(iii)(a) | Listed companies, or those being listed, other than on an SME exchange | Below INR 500 crore | 1 Apr 2017 |
| 4(1)(iii)(b) | Unlisted companies | INR 250 crore or more but below INR 500 crore | 1 Apr 2017 |
| 4(1)(iii)(c) | Holding, subsidiary, joint venture or associate companies of the above | None of its own | 1 Apr 2017 |

The proviso to rule 4(1) keeps companies on an SME exchange outside clauses (ii) and (iii). The same goes for the Institutional Trading Platform without an initial public offering. They may still adopt Ind AS by choice under clause (i).

A company that meets none of the tests follows the accounting standards in the Companies (Accounting Standards) Rules, 2021 (Indian AS). Rule 3 of the Ind AS Rules keeps the two sets apart. A company uses one set or the other, never a mix.

Our guide to [financial reporting for foreign subsidiaries in India](/insights/financial-reporting-for-foreign-subsidiaries-in-india-the-2026-founders-guide) covers the rest of the annual reporting cycle.

## Does a foreign parent's IFRS reporting make its Indian subsidiary apply Ind AS?

No. Rule 4(6) of the Ind AS Rules covers an Indian subsidiary, associate or joint venture of a foreign company. It applies Ind AS "either voluntarily or mandatorily if it meets the criteria", and the criteria test the Indian company itself. A foreign parent's net worth, listing or IFRS reporting does not trigger anything in India.

The reason sits in the definitions. The Ind AS Rules take "company" from section 2(20) of the Companies Act, 2013. It means a company incorporated under that Act or an earlier Indian company law. A Delaware, London or Singapore parent is not such a company. So it cannot be one of the companies "specified" in rule 4(1)(ii) or (iii).

So a very large parent can own an Indian subsidiary that stays on Indian AS for years. The gap then shows up in the reporting pack.

The Indian subsidiary cannot file IFRS accounts with the Registrar either. Section 129(1) requires financial statements that comply with the accounting standards notified under section 133, in the form Schedule III sets out. IFRS is not notified. The choice is Indian AS or Ind AS.

## How is net worth calculated for the Ind AS threshold?

Net worth follows section 2(57) of the Companies Act, 2013. It adds paid up capital, reserves created out of profits, securities premium and the profit and loss balance. It deducts accumulated losses and deferred or miscellaneous expenditure not written off. Revaluation, depreciation write back and amalgamation reserves stay out.

Rule 4(2) fixes the base. The test uses the audited standalone statements as on 31 Mar 2014, or the first audited statements for a period ending after that date. A company that meets a threshold later uses the first audited standalone statements in which it does.

| Item | In or out of net worth | Basis |
|---|---|---|
| Paid up equity and preference share capital | In | Section 2(57) |
| Securities premium | In | Section 2(57), as amended |
| Retained earnings (credit balance of profit and loss) | In | Section 2(57) |
| General reserve and other reserves created out of profits | In | Section 2(57) |
| Debit balance of profit and loss (accumulated losses) | Deducted | Section 2(57) |
| Deferred and miscellaneous expenditure not written off | Deducted | Section 2(57) |
| Revaluation reserve | Out | Section 2(57) |
| Reserve from write back of depreciation | Out | Section 2(57) |
| Amalgamation reserve | Out | Section 2(57) |
| Share application money pending allotment | Out, in our reading, as it is not yet share capital | Section 2(57) |

The test looks only at the Indian company's own audited balance sheet. Consolidated figures of the Indian company do not count, and the parent's figures never do. A fresh equity infusion from the parent counts in full once allotted, through share capital and premium.

Net worth is also one of the tests for CSR, which our guide to [CSR applicability for foreign owned companies](/insights/csr-applicability-foreign-owned-company-india) explains.

## When does Ind AS start after a company crosses INR 250 crore?

Ind AS starts from the financial year after the year end at which the company first meets the threshold. The Explanation to rule 4(2) says so. If net worth first reaches INR 250 crore on 31 Mar 2026, Ind AS applies from FY 2026-27. FY 2025-26 becomes the comparative year.

The comparative year moves the real start back by a year. Ind AS 101 defines the date of transition as the beginning of the earliest period with full comparative information. For first Ind AS statements for FY 2026-27, that date is 1 Apr 2025.

The first Ind AS statements cover the year ending 31 Mar 2027. They show balance sheets at 1 Apr 2025, 31 Mar 2026 and 31 Mar 2027.

The FY 2025-26 audit usually ends in the middle of 2026, inside the first Ind AS year. So project net worth before 31 March and start the opening balance sheet early.

## Which group links pull an Indian company onto Ind AS?

Rule 4(1)(ii)(c) and (iii)(c) cover the holding, subsidiary, joint venture and associate companies of a company that the thresholds catch. The link works both up and down an Indian chain. Fellow subsidiaries under the same foreign parent are not on the list, in our reading.

Section 2(6) defines an associate as a company over which another has significant influence, including a joint venture. Significant influence means control of at least 20 percent of total voting power or participation in business decisions under an agreement. So a 49 percent Indian partner in a joint venture makes the venture its associate at the least.

The common group cases for a foreign owned company are below:

1. **Indian step down subsidiary.** An Indian subsidiary with net worth of INR 300 crore owns an Indian step down company. The step down company is a subsidiary of a covered company, so it moves to Ind AS whatever its size.
2. **Large Indian subsidiary, small Indian parent.** The foreign group holds its Indian businesses through a small Indian holding company. If one Indian subsidiary reaches INR 250 crore, the Indian holding company becomes the holding company of a covered company and moves too.
3. **Joint venture with an Indian listed company.** A foreign parent holds 51 percent and an Indian listed company holds 49 percent. The listed company is on Ind AS under rule 4(1)(ii)(a) or (iii)(a). The venture is its associate or joint venture, so the venture applies Ind AS from its first year.
4. **Fellow subsidiaries.** Take two Indian subsidiaries of the same foreign parent, one large and one small. The large one moves; the small one does not, because neither is the other's holding company, subsidiary, joint venture or associate.

Rule 4(3) applies Ind AS to both standalone and consolidated statements once the duty arises. An Indian company that consolidates Indian subsidiaries therefore uses Ind AS at both levels.

## Can a foreign owned subsidiary adopt Ind AS voluntarily, and should it?

Yes. Rule 4(1)(i) lets any company adopt Ind AS for accounting periods from 1 Apr 2015, with comparatives. The choice is irrevocable under rule 4(8). Rule 4(9) keeps the company on Ind AS even if it later falls below every threshold, so adopt only when the benefit lasts.

We see three reasons that hold up. The group reports under IFRS and wants Indian accounts close to the pack. A sale or funding round is planned, and the buyer or investor wants accounts close to IFRS. Or the subsidiary is near INR 250 crore and will cross soon anyway.

The table sets out the costs.

| Factor | Stay on Indian AS | Adopt Ind AS voluntarily |
|---|---|---|
| Distance from the group's IFRS pack | Wide: leases, financial instruments, deferred tax and revenue differ | Narrow: only the carve outs and timing gaps remain |
| One time transition work | None | Opening balance sheet, restated comparatives, reconciliations under Ind AS 101 |
| Fair value and actuarial inputs | Fewer | More, for financial instruments, share based payments and some provisions |
| Statutory format | Schedule III, Division I | Schedule III, Division II |
| XBRL filing of AOC-4 | Only above the XBRL thresholds | Required for every Ind AS company |
| MAT book profit | Based on Indian AS profit | Based on Ind AS profit with prescribed adjustments, including the transition amount |
| Can the company go back? | Not relevant | No, under rules 4(8) and 4(9) |

The MCA's XBRL filing rules cover listed companies and those with paid up capital of INR 5 crore or more, or turnover of INR 100 crore or more. They also cover every company required to prepare Ind AS accounts. Our note on [AOC-4 XBRL filing for a foreign owned company](/insights/xbrl-filing-aoc-4-foreign-owned-company) covers the tagging work.

## What do the Ind AS and IFRS differences mean for the group pack?

Ind AS follows IFRS closely but not fully. Each notified standard lists its differences from the IFRS in an appendix, and some departures are deliberate carve outs. India also adopts new IFRS changes later than the IASB. So an Ind AS subsidiary still makes IFRS adjustments in its group pack, though fewer than an Indian AS one.

The first Ind AS statements must contain an explicit and unreserved statement of compliance with Ind AS, under Ind AS 101. Because of the carve outs, that statement does not make the accounts IFRS compliant.

The differences we most often adjust for in packs are below. Each notified standard carries an appendix comparing it with the IAS or IFRS. Read that appendix, as notified at your year end, before you change a pack.

| Area | IFRS | Ind AS | Effect on the IFRS pack |
|---|---|---|---|
| Financial year | Any year end | 31 March under section 2(41) of the Companies Act, 2013, unless the Central Government allows another year on application | A December parent needs a separate cut off and roll forward |
| Presentation | IAS 1 allows choices of format | Schedule III, Division II formats; expenses by nature; one statement of profit and loss with other comprehensive income | Remap line items to the group chart of accounts |
| Investment property | Cost or fair value model | Cost model only, with fair value disclosed (Ind AS 40) | Fair value adjustment in the pack if the group uses fair value |
| Bargain purchase gain | Profit or loss | Other comprehensive income, then capital reserve (Ind AS 103) | Reclassify to profit or loss |
| Business combinations under common control | Outside IFRS 3; group policy applies | Pooling of interests under Appendix C to Ind AS 103 | Align with the group's policy for internal restructurings |
| Discount rate for employee benefits | High quality corporate bond yields | Government bond yields (Ind AS 19) | Gratuity and leave obligations differ; get both from the actuary |
| Conversion option in foreign currency convertible bonds | Liability where the price is fixed in a foreign currency | Equity where the price is fixed in any currency (Ind AS 32) | Reclassify in the pack |
| Interest and dividend cash flows | Choice of category before IFRS 18 | Fixed categories under Ind AS 7 | Remap in the cash flow statement |
| First time adoption | IFRS 1 | Ind AS 101 adds deemed cost at carrying value (D7AA) and relief for long term foreign currency monetary items (D13AA) | Pack keeps the group's IFRS carrying amounts |
| New standards and amendments | IASB effective dates | MCA notification, usually later | Track each gap year by year |

Timing gaps are the most common source of pack adjustments. The IASB's 2024 amendments on classifying financial instruments and on electricity contracts that depend on nature apply under IFRS from 1 Jan 2026. India brought them into Ind AS 107 and Ind AS 109 by G.S.R. 725(E) of 12 Aug 2026, for annual periods from 1 Apr 2026. That notification came after this page was first published.

IFRS 18, the new presentation standard, applies under IFRS from 1 Jan 2027. ICAI's Accounting Standards Board issued an exposure draft of Ind AS 118 that proposes 1 Apr 2027.

As far as we can trace, MCA has not notified Ind AS 118. G.S.R. 725(E) of 12 Aug 2026 amended five other standards and left it out. Check the MCA notifications page for any later notification. Until Ind AS 118 is notified, plan for an Indian presentation that differs from the IFRS 18 group format.

Our note on the [31 March year end and a December parent](/insights/year-end-31-march-vs-december-parent-consolidation) covers the cut off mechanics. Our note on the [MIS report format for an Indian subsidiary](/insights/mis-report-indian-subsidiary-foreign-parent) covers monthly reporting to the parent.

## What does first time adoption under Ind AS 101 involve?

First time adoption means preparing an opening Ind AS balance sheet at the date of transition, restating the comparative year and explaining every difference. Ind AS 101 requires at least three balance sheets in the first Ind AS statements. All adjustments at the transition date go to retained earnings or another category of equity.

Paragraph 10 of Ind AS 101 sets the basic rules for the opening balance sheet:

1. Recognise every asset and liability that Ind AS requires.
2. Remove items that Ind AS does not allow as assets or liabilities.
3. Reclassify items that previous GAAP classified differently.
4. Measure everything under Ind AS.

Paragraph 11 sends the resulting adjustments to retained earnings at the date of transition. The standard then allows optional exemptions in Appendix D and requires exceptions in Appendix B. The exemptions decide how much of the past the company has to rebuild.

| Exemption or exception | What it allows | Why a foreign owned subsidiary uses it |
|---|---|---|
| Deemed cost at carrying value (D7AA) | Keep the previous GAAP carrying amount of all property, plant and equipment as deemed cost, if the functional currency does not change | Avoids rebuilding historical cost for every asset |
| Long term foreign currency monetary items (D13AA) | Continue the previous GAAP policy for exchange differences on items recognised before the first Ind AS period | Keeps an existing treatment of older foreign currency loans |
| Subsidiary adopting later than its parent (D16) | Lets a subsidiary use carrying amounts based on its parent's Ind AS transition | Usually not available where the parent reports under IFRS and has no Ind AS transition, in our reading |
| Estimates (exception in paragraph 14) | Ind AS estimates at the transition date must match previous GAAP estimates unless they were in error | Stops hindsight from entering the opening balance sheet |

The first Ind AS statements also need reconciliations of equity and profit from previous GAAP to Ind AS. Ind AS 101 requires them for the transition date and the end of the comparative year. Investors and the parent read these reconciliations closely.

Where the parent reports under IFRS, much of the pack work maps straight to Ind AS. The carve outs, the Schedule III format and the tax effects remain.

## How does Ind AS change tax and other Indian filings?

Ind AS changes the profit figure that feeds Minimum Alternate Tax (MAT), the format of the accounts and the XBRL duty. Normal income tax starts from the books but follows its own computation rules. Plan the tax effects in the same project as the accounts.

The main effects are:

1. **MAT.** Section 206 of the Income Tax Act, 2025 (old section 115JB) computes book profit from the statement of profit and loss. Ind AS companies adjust it for other comprehensive income and the Ind AS transition amount, as old section 115JB required. MAT is 15 percent for FY 2025-26 and 14 percent from tax year 2026-27. A company in the section 200 regime (old section 115BAA) pays tax at the section 200 rate, not MAT, in our reading, as the 1961 Act provided. The Budget Speech 2026-27 (paragraph 142) lets only companies in that regime set off brought forward MAT credit. The cap is one fourth of their tax liability. Read section 206 as amended by the Finance Act, 2026 before you rely on this.
2. **Schedule III.** The accounts move from Division I to Division II, with new captions and notes. Our note on [Schedule III financial statements](/insights/schedule-iii-financial-statements-format-india) maps both divisions.
3. **XBRL.** Every Ind AS company files AOC-4 in XBRL, whatever its capital or turnover.
4. **Audit.** The auditor reports on Ind AS compliance. The CARO 2020 and audit trail reporting stay the same. Our note on the [audit trail rule](/insights/audit-trail-edit-log-accounting-software-india) covers the latter.
5. **Dividend capacity.** The first proviso to section 123(1) excludes unrealised gains, notional gains, revaluation of assets and fair value changes when profit is computed for a dividend. Strip them out of Ind AS retained earnings before the board declares a dividend.

Our note on [Minimum Alternate Tax for foreign companies and their subsidiaries](/insights/minimum-alternate-tax-foreign-companies-india) covers the MAT computation in detail.

## Do banks, insurers and NBFCs follow the same test?

No. Rule 5 of the 2015 Ind AS Rules, as first notified, exempted insurance companies, banking companies and non banking financial companies (NBFCs). MCA added a separate NBFC track to rule 4 in 2016, in rule 4(1)(iv). NBFCs with net worth of INR 500 crore or more moved from 1 Apr 2018, and those from INR 250 crore from 1 Apr 2019. Banks and insurers follow their regulators' timetables. A foreign owned NBFC should read the NBFC clause first.

The NBFC track has its own holding and subsidiary rule, and it may not allow voluntary adoption below INR 250 crore, so read it before you plan an early move. A foreign owned group with an Indian NBFC and an Indian operating company can therefore end up with the two on different dates. We map each Indian entity separately before any transition plan.

Check RBI's current directions for the NBFC's class as well as the roadmap.

## What happens if a subsidiary that must use Ind AS keeps Indian AS?

Its financial statements then breach section 129(1), which requires compliance with the accounting standards notified under section 133. Rule 4 decides which notified set applies. The auditor would qualify the opinion, and the officers face section 129(7).

Section 129(7) covers the managing director, the whole time director in charge of finance, the CFO and any person the board charges with compliance. Where none of them exists, all the directors are liable. Each faces imprisonment of up to one year, a fine of INR 50,000 to INR 5,00,000, or both.

Restating a year after the AGM also means revised statements and fresh filings.

## Decision table for a foreign owned company

The table below covers the cases we see most in foreign owned groups. Each row tests the Indian company on its own figures and its Indian group links.

| Situation | Ind AS mandatory? | Rule | Notes |
|---|---|---|---|
| Wholly owned unlisted subsidiary, net worth INR 80 crore, no Indian group companies | No | Rule 4(6) | May adopt voluntarily under rule 4(1)(i) |
| Same subsidiary, net worth reaches INR 263 crore on 31 Mar 2026 | Yes, from FY 2026-27 | Rule 4(1)(iii)(b) and Explanation to rule 4(2) | Transition date 1 Apr 2025 |
| Unlisted subsidiary, net worth INR 520 crore | Yes | Rule 4(1)(ii)(b) | Already covered if it crossed in an earlier year |
| Small subsidiary with non convertible debentures listed on an Indian exchange | Yes | Rule 4(1)(iii)(a) | Listing of debt counts; SME exchange excluded |
| Small Indian step down company of a covered Indian subsidiary | Yes | Rule 4(1)(iii)(c) | Size of the step down company is irrelevant |
| Small Indian holding company of a covered Indian subsidiary | Yes | Rule 4(1)(iii)(c) | The link runs upward too |
| Joint venture with an Indian listed company holding 49 percent | Yes | Rule 4(1)(iii)(c) with section 2(6) | 49 percent is above the 20 percent influence line |
| Small subsidiary whose fellow Indian subsidiary is covered | No, in our reading | Rule 4(1)(iii)(c) | Fellow subsidiaries are not named |
| Foreign parent listed on NASDAQ or the LSE; Indian company unlisted | No | Rule 4(6) | The parent's listing is not the Indian company's listing |
| Subsidiary on Ind AS by choice, net worth later falls to INR 60 crore | Stays on Ind AS | Rules 4(8) and 4(9) | No route back to Indian AS |
| Indian NBFC subsidiary, net worth INR 300 crore | Yes, on the NBFC track | Rule 4(1)(iv) | Follow RBI directions too |

## What changed in 2026

The thresholds in rule 4 did not change in 2026. The standards themselves did. The table lists the changes around the test, with the date of each.

| Item | Old position | New position | Date | Instrument |
|---|---|---|---|---|
| Ind AS 1, 7, 12 and 107 | Earlier text | Classification of liabilities as current or non current, supplier finance disclosures, Pillar Two tax relief | Aug 2025 | Companies (Indian Accounting Standards) Second Amendment Rules, 2025; the MCA notifications page gives the G.S.R. number |
| AS 22 for Indian AS companies | No Pillar Two relief | No deferred tax on Pillar Two income taxes, with new disclosures | 10 Mar 2026 | Companies (Accounting Standards) Amendment Rules, 2026, G.S.R. 169(E) |
| MAT rate | 15 percent for FY 2025-26 | 14 percent from tax year 2026-27, under section 206 | 1 Apr 2026 | Income Tax Act, 2025 as amended by Finance Act, 2026 |
| Ind AS 101, 107, 109, 110 and 7 | Earlier text | Contingent features in financial assets, electronic payment settlement, electricity contracts that depend on nature, annual improvements | 12 Aug 2026, for periods from 1 Apr 2026 | Companies (Indian Accounting Standards) Amendment Rules, 2026, G.S.R. 725(E) |
| Presentation standard | Ind AS 1 | Ind AS 118 proposed in an exposure draft, for periods from 1 Apr 2027; not notified, as far as we can trace | Comment period ended 6 May 2025 | ICAI Accounting Standards Board exposure draft |
| Net worth thresholds | INR 250 crore and INR 500 crore | No change | None | Rule 4 |

### What has happened since

This page was first published on 13 Feb 2026. Since then:

1. MCA amended AS 22 by the Companies (Accounting Standards) Amendment Rules, 2026, G.S.R. 169(E) of 10 Mar 2026. Subsidiaries on Indian AS in groups subject to Pillar Two neither recognise nor disclose the related deferred tax, and give new disclosures instead.
2. The Income Tax Act, 2025 came into force on 1 Apr 2026, with MAT under section 206 at 14 percent.
3. MCA notified G.S.R. 725(E) on 12 Aug 2026, amending Ind AS 101, 107, 109, 110 and 7 for periods from 1 Apr 2026. Ind AS companies apply it in their FY 2026-27 accounts.

## Worked example

Take a hypothetical Indian Private Limited company, wholly owned by a Singapore parent that reports under IFRS. It has no Indian subsidiaries. Its audited standalone balance sheet at 31 Mar 2026 shows the figures below, in INR crore.

| Item (INR crore) | Amount | Counts in net worth? |
|---|---|---|
| Paid up equity share capital | 120 | Yes |
| Securities premium | 60 | Yes |
| Retained earnings | 85 | Yes |
| Revaluation reserve on land | 15 | No |
| Miscellaneous expenditure not written off | 2 | Deducted |

### The net worth test

1. Add the items that count: 120 plus 60 plus 85 is INR 265 crore.
2. Deduct miscellaneous expenditure: 265 minus 2 is INR 263 crore.
3. Leave out the revaluation reserve of INR 15 crore.
4. INR 263 crore is at least INR 250 crore and below INR 500 crore, so rule 4(1)(iii)(b) applies.

If the company had counted the revaluation reserve, it would show INR 278 crore. The answer would be the same here, but the reserve can decide a closer case. A company at INR 245 crore plus a revaluation reserve of INR 15 crore stays on Indian AS.

### The timetable

1. Threshold met on 31 Mar 2026.
2. First Ind AS financial year is FY 2026-27, ending 31 Mar 2027.
3. Date of transition is 1 Apr 2025, and FY 2025-26 is restated as the comparative year.
4. The first Ind AS statements show balance sheets at 1 Apr 2025, 31 Mar 2026 and 31 Mar 2027.

### A group link case

Now suppose the same Singapore parent sets up a second Indian company in 2026. It is a 51 to 49 joint venture with an Indian listed company. The listed company holds 49 percent of the votes, well above the 20 percent line for significant influence in section 2(6). The joint venture is an associate or joint venture of a company on Ind AS. It applies Ind AS from its first financial statements, whatever its net worth.

## Common mistakes

1. **Assuming the parent's IFRS reporting decides the question.** Fix: test the Indian company's own net worth, listing and Indian group links under rule 4.
2. **Counting the revaluation reserve in net worth.** Fix: follow section 2(57) and leave out revaluation, depreciation write back and amalgamation reserves.
3. **Starting the work after the audit of the threshold year.** Fix: project net worth before 31 March. The date of transition falls a year before the first Ind AS year.
4. **Missing the joint venture link.** Fix: check whether any Indian partner holding 20 percent or more is on Ind AS.
5. **Forgetting listed debt.** Fix: treat listed non convertible debentures as listing under rule 4(1)(iii)(a).
6. **Adopting voluntarily without a lasting reason.** Fix: weigh the irrevocable choice under rules 4(8) and 4(9) against the benefit.
7. **Calling Ind AS accounts IFRS accounts.** Fix: state compliance with Ind AS only, and keep the IFRS pack separate.
8. **Ignoring timing gaps between IFRS and Ind AS.** Fix: list each IASB change and its Indian notification date in the pack instructions each year.
9. **Leaving MAT out of the transition plan.** Fix: compute the Ind AS book profit adjustments under section 206 with the opening balance sheet.
10. **Mapping the pack once and never again.** Fix: review the Schedule III to group mapping each year after any Ind AS or IFRS change.

## Checklist

1. Compute the Indian company's net worth under section 2(57) on its audited standalone balance sheet.
2. Check whether any equity or debt security of the company is listed or being listed.
3. Map every Indian holding company, subsidiary, joint venture and associate, with voting percentages.
4. Test each mapped Indian company against rule 4(1)(ii) and (iii).
5. Project net worth at the coming 31 March if the company is within reach of INR 250 crore.
6. Decide on voluntary adoption with the board and the parent, recording the irrevocable nature of the choice.
7. Fix the date of transition and the first Ind AS financial year.
8. Choose the Ind AS 101 exemptions, starting with deemed cost under D7AA.
9. Prepare the opening Ind AS balance sheet and the restated comparative year.
10. Prepare the equity and profit reconciliations that Ind AS 101 requires.
11. Compute the MAT effect of the transition under section 206 of the Income Tax Act, 2025.
12. Update the group pack mapping for the carve outs and any timing gaps.
13. Brief the statutory auditor and agree the timetable before the first Ind AS year starts.

Our [statutory audit guide for a foreign owned Indian subsidiary](/insights/statutory-audit-foreign-owned-indian-subsidiary) covers the audit side. Our [accounting and bookkeeping service](/services/accounting-bookkeeping.html) runs Ind AS conversions for foreign owned subsidiaries.

To ask whether your subsidiary is near the line, email business@krystal7.com with the last audited balance sheet and a group chart.

## Key terms

- **Indian Accounting Standards (Ind AS)**: The accounting standards converged with IFRS, notified under the Companies (Indian Accounting Standards) Rules, 2015. An unlisted company applies them from an Indian net worth of INR 250 crore, or when an Indian group company must. The size of a foreign parent is irrelevant. Other companies follow the Accounting Standards (AS). (https://krystal7.com/glossary#indian-accounting-standards-ind-as)
- **Net worth (section 2(57))**: Paid up share capital plus reserves created out of profits, securities premium and the profit and loss balance, less accumulated losses, deferred expenditure and miscellaneous expenditure not written off, as per the audited balance sheet. It excludes revaluation, depreciation write back and amalgamation reserves. (https://krystal7.com/glossary#net-worth-section-2)
- **Date of transition to Ind AS**: The beginning of the earliest period for which a company presents full comparative information in its first Ind AS financial statements, under Ind AS 101. The company prepares an opening Ind AS balance sheet at this date and books the adjustments in retained earnings. (https://krystal7.com/glossary#date-of-transition-to-ind-as)
- **Carve out (Ind AS)**: A departure in an Indian Accounting Standard from the IFRS it is based on, made to suit Indian law or conditions. Each notified Ind AS lists its differences from the IFRS in an appendix, which is why Ind AS accounts cannot claim compliance with IFRS. (https://krystal7.com/glossary#carve-out-ind-as)
- **Group reporting pack**: The financial information an Indian subsidiary sends its foreign parent for consolidation, prepared under group policies such as IFRS or US GAAP to the parent's dates. It is separate from the statutory financial statements that section 129 of the Companies Act, 2013 requires. (https://krystal7.com/glossary#group-reporting-pack)
- **Voluntary adoption of Ind AS**: A company's choice under rule 4(1)(i) of the Companies (Indian Accounting Standards) Rules, 2015 to apply Ind AS before any threshold requires it. Under rules 4(8) and 4(9), the choice is irrevocable and the company stays on Ind AS for all later financial statements. (https://krystal7.com/glossary#voluntary-adoption-of-ind-as)

## Frequently Asked Questions

### Is Ind AS mandatory for a Private Limited company in India?

Only if it meets rule 4 of the Companies (Indian Accounting Standards) Rules, 2015. An unlisted Private Limited company must apply Ind AS once its net worth reaches INR 250 crore. It must also apply Ind AS if it is a holding company, subsidiary, joint venture or associate of a covered Indian company. Otherwise it follows the Companies (Accounting Standards) Rules, 2021.

### Does the Ind AS threshold apply to a subsidiary of a foreign company?

Yes, on the subsidiary's own figures. Under rule 4(6) of the Companies (Indian Accounting Standards) Rules, 2015, an Indian subsidiary of a foreign company applies Ind AS if it meets the criteria. The foreign parent's net worth, listing or IFRS reporting does not count, because "company" in the rules means an Indian company.

### What is the net worth limit for Ind AS?

INR 250 crore for unlisted companies under rule 4(1)(iii)(b), and INR 500 crore under rule 4(1)(ii). Net worth follows section 2(57) of the Companies Act, 2013 and is measured on the audited standalone balance sheet. A listed company applies Ind AS at any net worth, unless it is listed only on an SME exchange.

### From when does Ind AS apply after crossing INR 250 crore?

From the next financial year, under the Explanation to rule 4(2). A company that first crosses INR 250 crore on 31 Mar 2026 applies Ind AS from FY 2026-27. Its date of transition under Ind AS 101 is 1 Apr 2025, because FY 2025-26 is the comparative year.

### Can an Indian subsidiary prepare its statutory accounts under IFRS?

No. Section 129(1) of the Companies Act, 2013 requires financial statements that comply with the standards notified under section 133, in Schedule III format. IFRS is not notified. The subsidiary uses Indian AS or Ind AS and sends its parent a separate IFRS reporting pack with adjustments.

### Can a company adopt Ind AS voluntarily?

Yes. Rule 4(1)(i) of the Companies (Indian Accounting Standards) Rules, 2015 lets any company adopt Ind AS, with comparatives, for periods from 1 Apr 2015. Rule 4(8) makes the choice irrevocable, and rule 4(9) keeps the company on Ind AS even if it later falls below every threshold.

### Can a company go back to Indian AS after adopting Ind AS?

No. Rule 4(9) of the Companies (Indian Accounting Standards) Rules, 2015 covers a company that has started on Ind AS, by choice or by law. It must follow Ind AS for all later financial statements. This holds even if net worth falls below INR 250 crore or the company delists.

### Does a fellow subsidiary's Ind AS status affect my company?

In our reading, no. Rule 4(1)(ii)(c) and (iii)(c) name holding, subsidiary, joint venture and associate companies of a covered company. Two subsidiaries of the same foreign parent are none of these to each other. Check for any cross holding or Indian intermediate holding company before relying on this.

### Is a joint venture with an Indian listed company on Ind AS?

Usually yes. A listed Indian company applies Ind AS under rule 4(1)(ii)(a) or (iii)(a). Its joint ventures and associates must then apply Ind AS under rule 4(1)(iii)(c), whatever their size. Under section 2(6), holding 20 percent or more of the votes is enough for an associate.

### Does listed debt bring a company under Ind AS?

Yes. Rule 4(1)(ii)(a) and (iii)(a) cover companies whose equity or debt securities are listed or being listed, in India or abroad. An Indian subsidiary with listed non convertible debentures applies Ind AS at any net worth. Listing only on an SME exchange or the Institutional Trading Platform is excluded.

### Are Ind AS financial statements the same as IFRS?

No. Ind AS is based on IFRS but has carve outs. Examples are the cost model for investment property and the government bond discount rate for employee benefits. India also notifies IFRS changes later. Ind AS 101 requires a statement of compliance with Ind AS, not IFRS.

### What is the date of transition under Ind AS 101?

It is the beginning of the earliest period for which the company presents full comparative information in its first Ind AS statements. For a first Ind AS year of FY 2026-27, the date of transition is 1 Apr 2025. The opening Ind AS balance sheet is prepared at that date.

### Which Ind AS 101 exemptions help a foreign owned subsidiary most?

Deemed cost under paragraph D7AA lets the company keep the previous GAAP carrying value for all its property, plant and equipment. Paragraph D13AA keeps an existing policy for older long term foreign currency monetary items. Both save the cost of rebuilding history in the opening balance sheet.

### Does Ind AS change Minimum Alternate Tax?

Yes, for companies inside MAT. Section 206 of the Income Tax Act, 2025, which replaces section 115JB, computes book profit from the statement of profit and loss. Ind AS companies adjust book profit for other comprehensive income and the Ind AS transition amount, as old section 115JB required. MAT is 14 percent from tax year 2026-27.

### Do Ind AS companies have to file AOC-4 in XBRL?

Yes. The MCA's XBRL filing rules, made under section 137 of the Companies Act, 2013, cover every company required to prepare Ind AS financial statements. They also cover listed companies and companies with paid up capital of INR 5 crore or more or turnover of INR 100 crore or more.

### Has India adopted IFRS 18?

Not by 23 Oct 2026, as far as we can trace. ICAI's Accounting Standards Board issued an exposure draft of Ind AS 118, based on IFRS 18, proposing annual periods from 1 Apr 2027. IFRS 18 itself applies under IFRS from 1 Jan 2027. Watch MCA notifications before planning the group format.

## Sources

- Companies (Indian Accounting Standards) Rules, 2015, G.S.R. 111(E) of 16 Feb 2015 (rules 2 to 5 and Ind AS 101), High Court of Tripura rules library, https://thc.nic.in/Central%20Governmental%20Rules/Companies%20(Indian%20Accounting%20Standards)%20Rules,2015.pdf
- Income Tax Department (Companies Act, 2013 text), Section 2, definitions including clauses 6, 20, 41, 57 and 87, accessed 23 Oct 2026, https://www.incometaxindia.gov.in/w/section-2-148
- Ministry of Corporate Affairs, Notifications, including G.S.R. 725(E) of 12 Aug 2026 (Companies (Indian Accounting Standards) Amendment Rules, 2026) and G.S.R. 169(E) of 10 Mar 2026 (Companies (Accounting Standards) Amendment Rules, 2026), https://www.mca.gov.in/content/mca/global/en/acts-rules/ebooks/notifications.html
- Income Tax Department (Companies Act, 2013 text), Section 129, financial statement, accessed 23 Oct 2026, https://www.incometaxindia.gov.in/w/section-129-81
- Income Tax Department (Companies Act, 2013 text), Section 123, declaration of dividend, accessed 23 Oct 2026, https://www.incometaxindia.gov.in/w/section-123-83
- Ministry of Finance, Budget Speech 2026-27, 1 Feb 2026 (paragraphs 142 and 143 on MAT), https://www.indiabudget.gov.in/doc/Budget_Speech.pdf
- India Code, Companies Act, 2013 (sections 129, 133 and 123), https://www.indiacode.nic.in/handle/123456789/2114
- ICAI Accounting Standards Board, Exposure Draft of Ind AS 118, Presentation and Disclosure in Financial Statements, comments by 6 May 2025, https://asbcomment.icai.org/view-more/155

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