Accounting standards decide how a company recognises revenue, measures assets and liabilities, reports profit and presents its financial statements. Two companies with identical transactions can report different numbers simply because they follow different frameworks. That is why the Ind AS vs IFRS vs IGAAP question matters to Indian directors, CFOs and investors.

The three terms are related but not interchangeable. Ind AS (Indian Accounting Standards) is India’s notified framework for companies covered by its roadmap; it is based on IFRS but includes India-specific modifications. IFRS Accounting Standards are issued by the International Accounting Standards Board (IASB) and used directly in many other countries. IGAAP (Indian Generally Accepted Accounting Principles) is a broad, informal term for accounting principles applied in India, often used to mean the older Accounting Standards (AS) rather than one single, separately defined framework.

What Is Ind AS?

Indian Accounting Standards (Ind AS) are notified by the Central Government under the Companies Act, 2013 through the Companies (Indian Accounting Standards) Rules, 2015, as amended. The standards are developed by the ICAI’s Accounting Standards Board and recommended by the National Financial Reporting Authority (NFRA) before the Ministry of Corporate Affairs (MCA) notifies them.

Ind AS was India’s route to converging with global standards without adopting IFRS wholesale. Each Ind AS corresponds to an IFRS or IAS standard (Ind AS 115 to IFRS 15, Ind AS 116 to IFRS 16, and so on), and each includes an appendix explaining its major differences from the IFRS original. Those differences exist to reflect Indian law, regulation and economic conditions. So while Ind AS is substantially converged with IFRS, it should not be described as identical to it.

What Is IFRS?

IFRS Accounting Standards are issued by the IASB, part of the IFRS Foundation, to promote consistent and comparable financial reporting across countries. Each jurisdiction decides whether to require, permit or adapt them. According to the IFRS Foundation’s jurisdiction profile, India does not require or permit IFRS for domestic companies’ statutory financial statements; it uses Ind AS instead.

IFRS still matters to many Indian businesses, for example:

• Indian subsidiaries reporting to a foreign parent that uses IFRS.
• Indian groups with overseas subsidiaries in IFRS countries.
• Companies seeking foreign investment or listing abroad.
• Cross-border mergers, acquisitions and due diligence.

Preparing an IFRS reporting package for a foreign parent does not mean the Indian company can replace its statutory Indian financial statements with IFRS statements. The Indian entity still needs accounts under the framework that applies to it in India.

What Is IGAAP?

“IGAAP” or “Indian GAAP” is an umbrella term, not the name of a single standard. In company reporting, Indian accounting rules come in two notified sets:

• Ind AS under the Companies (Indian Accounting Standards) Rules, 2015, for companies covered by the Ind AS roadmap.
• Accounting Standards (AS) under the Companies (Accounting Standards) Rules, 2021, for companies not covered by Ind AS.

In everyday use, people usually say “IGAAP” to mean the AS framework, as opposed to Ind AS. It is clearer to name the specific framework. A company cannot simply pick whichever framework it finds convenient; the applicable one depends on its legal form, listing status, net worth, group relationships and sector.

Ind AS vs IFRS vs IGAAP: Key Differences

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The exact accounting treatment always depends on the specific standard and transaction. Not every difference between frameworks will be material for every company.

What Are the Major Differences Between Ind AS and IFRS?

The ICAI publishes the major differences between Ind AS and IFRS, and each Ind AS includes an appendix listing them. Some key examples:

Revenue Recognition (Ind AS 115 vs IFRS 15)

Both use the same five-step model: identify the contract, identify performance obligations, determine the transaction price, allocate it, and recognise revenue as obligations are satisfied. Ind AS 115 adds a few India-specific requirements, including removing penalties from the examples of variable consideration, requiring separate presentation of excise duty, and requiring a reconciliation between contracted price and revenue recognised. Otherwise the principles are substantially aligned.

Leases (Ind AS 116 vs IFRS 16)

Both bring most leases onto the lessee’s balance sheet as a right-of-use asset and lease liability. Differences are limited: Ind AS 116 removes the fair value model for right-of-use assets that meet the definition of investment property (because Ind AS 40 does not allow fair value), and it requires lease interest paid to be classified as a financing cash flow, where IFRS allows a policy choice.

Financial Instruments (Ind AS 109 vs IFRS 9)

Classification, measurement and the expected credit loss (ECL) impairment model are substantially aligned. Ind AS 109 removes the option to continue IAS 39 hedge accounting. A related carve-out sits in Ind AS 32: the conversion option in a foreign currency convertible bond with a fixed conversion price is classified as equity, whereas IFRS treats it as a derivative liability.

Consolidated Financial Statements (Ind AS 110 vs IFRS 10)

Both use the same control model to decide which entities to consolidate. The standards are substantially aligned; differences are limited to consequential changes, such as those arising because Ind AS 40 does not permit the fair value model.

Business Combinations (Ind AS 103 vs IFRS 3)

Both apply acquisition accounting: identify the acquirer, measure identifiable assets and liabilities at fair value, and recognise goodwill. Two notable differences: under Ind AS 103, a bargain purchase gain is recognised in other comprehensive income and accumulated in a capital reserve rather than in profit or loss; and Ind AS 103 includes guidance on business combinations under common control (a carve-in), which IFRS 3 does not cover.

Presentation (Ind AS 1 vs IAS 1)

Ind AS 1 requires a single statement of profit and loss including other comprehensive income, and expenses classified by nature, whereas IAS 1 allows more choices. Ind AS 1 also includes a carve-out on loan covenant breaches: a long-term loan need not be classified as current if the lender agrees, after the reporting date but before the financial statements are approved, not to demand payment. Presentation also follows Schedule III to the Companies Act. Internationally, IFRS 18 is set to replace IAS 1 for periods beginning on or after 1 January 2027; check whether a corresponding Ind AS has been notified before comparing.

Other well-known differences include Ind AS 40 permitting only the cost model for investment property, and Ind AS 19 requiring government bond yields to discount employee benefit obligations.

Ind AS Applicability: Which Indian Companies Must Follow It?

Under Rule 4 of the Companies (Indian Accounting Standards) Rules, 2015, Ind AS applies in phases to both standalone and consolidated financial statements:

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Important points:

• SME exchange companies listed (or listing) on an SME exchange are not required to follow Ind AS, though they may choose to.
• Group companies: holding, subsidiary, joint venture and associate companies of a covered company must also follow Ind AS, regardless of their own size. A small private subsidiary of a large listed group is therefore often on Ind AS.
• Net worth is defined under Section 2(57) of the Companies Act and measured on standalone financial statements under the Rules’ measurement provisions.
• Once on Ind AS, always on Ind AS: a company that adopts Ind AS, voluntarily or mandatorily, must continue to follow it for all subsequent financial statements, even if it later falls below the criteria.
• Overseas group entities may prepare standalone accounts under their local requirements, but must report Ind AS-adjusted numbers for the Indian parent’s consolidation.
• Banks, insurers and NBFCs follow separate arrangements. NBFCs have their own roadmap, while scheduled commercial banks and insurers have been deferred until notified, so the general corporate roadmap should not be assumed to apply to them.

Companies outside the roadmap generally follow the Accounting Standards (AS) under the Companies (Accounting Standards) Rules, 2021. Any company may adopt Ind AS voluntarily (subject to the sector exclusions above), but the choice is irrevocable.

Which Accounting Framework Should an Indian Company Follow?

The answer is a legal determination, not a preference. A practical sequence:

1. Identify the entity’s legal form and regulatory category (private, public, listed, bank, NBFC, insurer).
2. Check whether the Ind AS roadmap applies based on listing status and net worth.
3. Review group relationships and sector rules, including whether a holding company, subsidiary, JV partner or associate is on Ind AS.
4. Confirm the statutory framework: Ind AS or AS.
5. Identify additional reporting needs, such as IFRS packages for a foreign parent, investor or lender.
6. Decide how to bridge them: reconciliations, adjustments or a separate reporting package, and document the basis of preparation for each.

What Is the Difference Between Ind AS and Traditional Accounting Standards (AS)?

The AS framework predates convergence and is closer to India’s historical accounting practice. Ind AS was introduced to align India with IFRS for larger and listed companies. In practice, Ind AS tends to:

• use fair value more widely, for example for many financial instruments;
• follow substance over legal form more closely, including for financial instruments and business combinations;
• bring most leases onto the lessee’s balance sheet (Ind AS 116), where AS 19 distinguishes finance and operating leases;
• use a contract-based revenue model (Ind AS 115) rather than the older AS 9 approach;
• use an expected credit loss model for impairment of financial assets; and
• require more extensive disclosures, including other comprehensive income.

That does not make AS outdated or unsuitable. It is the correct framework for companies outside the Ind AS roadmap, and the Companies (Accounting Standards) Rules, 2021 include relaxations for smaller companies. What matters is applying the framework that legally applies to you.

Practical Example: How the Framework Can Affect Reporting

A typical workflow:

1. Keep one set of books in the company’s accounting system.
2. Prepare the Indian statutory financial statements under AS.
3. Identify adjustments needed for the IFRS package, such as lease accounting under IFRS 16 and ECL provisions under IFRS 9.
4. Document accounting policy differences and reconciliation entries.
5. Review the package for consistency with the statutory accounts and completeness.

Not every multinational subsidiary needs two complete sets of statutory financial statements. Usually there is one statutory set plus a reporting package.

Challenges in Moving From AS to Ind AS or Supporting IFRS Reporting

Transition is not just a change of format. Common challenges include confirming the applicable framework and transition date, reviewing accounting policies, gathering historical data for comparatives and the opening balance sheet, assessing leases and financial instruments, reviewing revenue contracts, evaluating consolidation scope, updating systems, training the finance team, preparing reconciliations and disclosures, and coordinating with overseas group teams.

First-time adoption is governed by Ind AS 101 (or IFRS 1 for IFRS). It requires an opening Ind AS balance sheet at the transition date and comparatives, and offers specific optional exemptions, such as using previous carrying amounts of property, plant and equipment as deemed cost. The actual effort depends on the company, its current framework and the target requirements.

Common Mistakes Indian Companies Should Avoid

1. Assuming Ind AS and IFRS are identical. Check the differences appendix of each Ind AS.
2. Treating IGAAP as one defined standard. Name the specific framework: Ind AS or AS.
3. Assuming every private company must follow Ind AS. Most smaller private companies follow AS.
4. Ignoring group applicability. A small subsidiary of an Ind AS company is usually on Ind AS too.
5. Overlooking sector rules. Banks, insurers and NBFCs have separate arrangements.
6. Assuming IFRS group reporting replaces Indian statutory accounts. It does not.
7. Using outdated thresholds or amendments. Check the current Rules and MCA notifications.
8. Applying treatments without checking the standard. Confirm the current text for each transaction.
9. Underestimating transition work. Plan for opening balance sheet adjustments and disclosures.
10. Choosing a framework without confirming legal applicability. Voluntary Ind AS adoption cannot be reversed.

Frequently Asked Questions

Choosing the Right Framework Starts With the Law

To summarise the Ind AS vs IFRS vs IGAAP question:

• Ind AS: India’s notified, IFRS-based standards for companies covered by the roadmap and voluntary adopters.
• IFRS: the IASB’s international standards, used according to each jurisdiction’s rules and relevant to Indian companies mainly for group and foreign reporting.
• IGAAP: an umbrella term for Indian accounting principles; in company reporting it can mean Ind AS or AS, but most often refers to AS.

The right framework depends on legal applicability, entity classification, sector rules and group reporting requirements. Switching frameworks does not by itself improve performance or guarantee compliance; applying the correct one well does.

This article is general information and not accounting or legal advice for any specific entity. Standards and rules are amended periodically; refer to the current notified text.

Sources: IFRS Foundation: India jurisdictional profile · ICAI: Major differences between Ind AS and IFRS · Ministry of Corporate Affairs · ICAI · NFRA