Our latest in a series of updates on the new revenue standard in India.
As a quick primer: Earlier this year, the country’s Ministry of Corporate Affairs (MCA) put a roadmap in place for adoption of the Indian Accounting Standards (Ind AS) – India’s accounting standards converged with the International Financial Reporting Standards (IFRS). On February 16, 2015, the MCA announced the Companies (Indian Accounting Standards) Rules to apply Ind AS. This new revenue standard — Ind AS 115 – will have a bearing on how corporations recognize revenue in their financial statements.
Last week, all the three apex industry chambers—Assocham, FICCI and CII—together represented to the National Advisory Committee on Accounting Standards (NACAS) that implementation of Ind AS 115 be delayed from April 1, 2017, to April 1,2018. This submission is in contrast to the CA Institute’s thinking that the new revenue standard be implemented from April 1, 2016, itself as planned, despite the International Accounting Standards Board (IASB) deferral to 2018.
The NACAS, which advises on formulation and application of accounting policy and standards for corporate adoption, meets Thursday (Sept. 3) to consider India Inc’s demand to push back by two years the implementation of this key new revenue standard.
The major impact of the new standard will be felt on financial statements of companies in information technology, telecom, automobiles and real estate sectors.
The Modi-led government is expected to take final view on deferment based on the recommendations of NACAS. The growing debate in India is whether to defer the implementation of Ind AS 115 (IFRS 15 equivalent) until 2018 when IFRS 15 will be mandatorily adopted globally.
While deferring implementation of IFRS 15 to January 1, 2018, the IASB has, however, allowed voluntary adoption of this new revenue recognition standard.
Stay tuned to this space for continued updates regarding the deferral of new Indian Accounting Standards.