IFRS vs Ind AS: Master Comparison of All Key Differences

IFRS vs Ind AS: Master Comparison of All Key Differences

By Sai Manikanta Pedamallu (ACCA, CMA US, CSCA US, CGMA, ACMA, Dip IFRS, M.Com, MBA, MA)

Lead Instructor, Global Fin X | www.globalfinx.in/manikanta

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Convergence, Not Adoption

India did not adopt IFRS. It converged with IFRS, and the distinction is deliberate.

Adoption would have meant applying IFRS as issued by the IASB. Convergence means starting from IFRS and making specific, considered departures where the Indian legal framework, business practices, or market conditions require them.

Those departures fall into three categories:

Carve-outs, where Ind AS removes or changes something IFRS permits or requires.

Carve-ins, where Ind AS adds guidance or removes an option, producing a narrower or more prescriptive requirement than IFRS.

Other changes, principally terminology, presentation, and references to Indian law.

The consequence, which is stated plainly in Indian technical literature and is worth stating plainly here: financial statements prepared under Ind AS are not IFRS compliant. They are very similar. They are not the same, and an entity wishing to assert IFRS compliance must adjust for the differences.

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The Honest Headline

Having said all that, the substantive message of this post is that the differences are narrow.

Someone expecting a long list of divergences will be disappointed. Recognition principles, measurement models, and disclosure frameworks are, across the great majority of standards, identical.

Where practitioners encounter genuine differences in day-to-day Indian reporting, they are usually not standard-level differences at all. They are the regulatory overlay: the Companies Act, Schedule III, SEBI's listing regulations, RBI's prudential framework, and IRDAI's requirements sitting alongside the standard and imposing additional or different requirements.

That distinction runs through the rest of this post.

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Carve-Out One: Investment Property Must Use the Cost Model

This is the most significant genuine carve-out.

IAS 40 permits an entity to choose between the fair value model and the cost model for investment property, applying the chosen model to all its investment properties. Under the fair value model, property is remeasured at each reporting date with changes recognised in profit or loss.

Ind AS 40 prohibits the fair value model. Investment property must be measured under the cost model after initial recognition: cost less accumulated depreciation and accumulated impairment losses. The paragraphs of IAS 40 dealing with the fair value model were deleted in the Indian version.

Fair value must still be disclosed in the notes, so the information is available to users. It simply does not sit on the balance sheet and its movements do not pass through profit or loss.

Why the carve-out exists. The stated rationale concerns the availability of reliable fair value measurement across the Indian property market and concerns about introducing unrealised fair value movements into reported profit.

The practical consequence. An Indian company holding investment property reports a materially different balance sheet and income statement from an IFRS reporter holding identical property and electing fair value. The Indian entity reports depreciation and no fair value gains; the IFRS entity reports no depreciation and fair value movements through profit or loss.

For anyone studying IAS 40 for the Dip IFRS exam, the fair value model is examinable and must be learned. For anyone applying Ind AS 40 in Indian practice, it is not available.

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Carve-Out Two: Long-Term Foreign Currency Monetary Items

Covered in Posts 77 and 78, and worth restating because it is the other carve-out with real financial statement effect.

IAS 21 requires exchange differences on monetary items to be recognised in profit or loss in the period in which they arise.

Ind AS 101 permits a first-time adopter to continue the policy it applied under previous Indian GAAP for long-term foreign currency monetary items existing at the date of transition: capitalising exchange differences into the cost of a related depreciable asset, or amortising them over the remaining life of the item, rather than recognising them immediately in profit or loss.

Why it exists. Indian companies with substantial external commercial borrowings had built the previous treatment into their reported results, and requiring immediate recognition at transition would have produced large one-off charges.

Why it is closing. The relief applies only to items existing at the transition date and only until those items are settled. It is unavailable for any borrowing taken on after transition, and the affected population shrinks each year as legacy borrowings mature.

Where an entity still applies it, its exchange difference charge is not comparable with a peer that does not, and the accounting policy note is the only place a user can identify this.

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Carve-Out Three: Impracticability Relief for Associates

IAS 28 requires the financial statements of an associate or joint venture used in applying the equity method to be prepared as of the same date as those of the investor, and requires uniform accounting policies for like transactions.

Ind AS 28 adds the qualifier "unless impracticable" to both requirements.

The relief recognises a practical reality: an Indian investor holding a minority stake in an associate may have no ability to compel that associate to align its reporting date or its accounting policies, particularly where the associate is closely held or is itself subject to a different regulatory framework.

The relief is narrow. Impracticability must genuinely exist, not merely inconvenience, and the position should be disclosed.

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Carve-Ins: Where Ind AS Adds or Removes Options

A carve-in makes Ind AS more prescriptive than IFRS, either by adding guidance IFRS does not provide or by removing an option IFRS permits.

Ind AS 23: computing the exchange difference adjustment. Covered in Post 65. Both standards include, within borrowing costs, exchange differences on foreign currency borrowings to the extent they are regarded as an adjustment to interest costs. IAS 23 provides no method for determining that extent. Ind AS 23 adds specific guidance capping the adjustment at the difference between the cost of borrowing in the functional currency and the cost of borrowing in the foreign currency.

This is a genuine improvement in specificity, and it produces a narrower and more determinable amount than the open-ended IAS 23 wording.

Ind AS 103: business combinations under common control. Covered in Post 46. IFRS 3 excludes common control transactions from its scope and the IASB has not issued replacement guidance, leaving a genuine gap. Ind AS 103 includes Appendix C addressing these transactions, requiring the pooling of interests method with assets and liabilities recorded at carrying amounts.

Given how common intragroup restructurings are in Indian conglomerate structures, this is a practically significant addition, and it means Indian preparers have guidance their IFRS counterparts do not.

Ind AS 101: elimination of pre-transition effective dates. IFRS 1 contains various dates from which particular standards could be applied on first-time adoption. Ind AS 101 eliminates those that precede the Indian transition date, since they are not meaningful in the Indian context.

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Terminology and Presentation

These differences change nothing substantive but they are visible on every page.

Balance sheet, not statement of financial position.

Statement of profit and loss, not statement of comprehensive income.

Indian rupee presentation, with amounts in lakhs, crores, or millions per Schedule III.

Schedule III format. Indian financial statements follow the format prescribed by Schedule III to the Companies Act 2013, which specifies line items, groupings, and note structures. IFRS specifies minimum line items but leaves format largely to the entity.

References to Indian law replace references to other jurisdictions' company law throughout.

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The Bigger Story: The Regulatory Overlay

For practitioners, the regulatory overlay produces more day-to-day difference than the carve-outs do, and it is not a difference between the standards at all.

The Companies Act 2013

Schedule III prescribes the financial statement format, as above.

Section 129 requires every company to prepare standalone financial statements, and requires consolidated financial statements in addition where subsidiaries, associates, or joint ventures exist, both laid before the same annual general meeting. IFRS does not require separate financial statements at all, as Post 53 explained; the requirement comes from company law.

Section 68 requires shares repurchased to be extinguished immediately, meaning treasury shares as contemplated by IAS 32 arise in India principally through ESOP trust structures, as Post 24 covered.

Section 188 governs approval of related party transactions, using its own definitions and thresholds, entirely separately from Ind AS 24's disclosure requirements, as Post 80 set out.

Section 135 imposes corporate social responsibility spending obligations with no IFRS equivalent.

Schedule II specifies useful lives for depreciation, which interacts with the IAS 16 requirement to depreciate over the asset's useful life to the entity, as Post 33 discussed.

Sector Regulators

RBI prescribes prudential norms for banks and NBFCs that operate alongside Ind AS 109. As Post 20 covered, the higher of the ECL provision and the IRAC provision applies, with any excess of IRAC over ECL routed to an impairment reserve. RBI also prescribes segment categories for banks, which interacts with the management approach in Ind AS 108, as Post 81 noted. Scheduled commercial banks transitioned to ECL provisioning from 1 April 2027 under the ACPIR framework.

SEBI requires quarterly reporting, subject to limited review, which makes Ind AS 34 one of the most frequently applied standards in Indian practice. Its listing regulations impose their own related party approval and disclosure requirements, and the SBEB Regulations govern share-based employee benefits alongside Ind AS 102.

IRDAI determines the operative date and format for insurer financial statements. Ind AS 117 applied from a transition date of 1 April 2026 under the IRDAI roadmap, with Schedule IIA prescribing the presentation format and dual reporting required during transition, as Posts 73 to 76 covered.

Tax

MAT and MAT credit have no IFRS equivalent, and the application of Ind AS 12's definition of a deferred tax asset to MAT credit is covered in Post 64.

Section 115BAA and 115BAB concessional regimes affect the rate at which deferred tax is measured.

The Income-tax Act, 2025, commencing 1 April 2026, renumbers provisions without altering the substantive deferred tax analysis, but requires references to be updated.

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Standard-by-Standard Summary

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Timing Differences

A category that is easy to overlook: Ind AS adopts IFRS amendments through MCA notification, which introduces a lag.

An amendment effective under IFRS from 1 January of a given year may become effective under Ind AS from 1 April of that year or later, depending on when the notification is issued. Occasionally the gap is longer.

For a group with both IFRS and Ind AS reporting obligations, this means a period during which the same transaction is accounted for differently in the two sets of statements, purely because of adoption timing rather than substantive divergence.

IFRS 18 is the current example. It applies internationally for annual reporting periods beginning on or after 1 January 2027, with Ind AS 118 expected to apply in India from 1 April 2027.

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Why This Matters for Dip IFRS Candidates

Three practical points.

Study IFRS, not Ind AS. The examination is on IFRS as issued by the IASB. Where they differ, the IFRS position is the examinable one. The fair value model for investment property is the clearest case: prohibited in Indian practice, fully examinable in Dip IFRS.

Know the differences anyway. They are not examinable, but they are exactly what an interviewer or a manager will ask about, and getting them right signals that you understand the framework rather than having memorised a syllabus.

Do not assume convergence means identity. The temptation, having learned Ind AS in Indian practice, is to answer an IFRS question with the Indian treatment. On investment property, on long-term foreign currency items, and on common control transactions, that produces the wrong answer.

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Why This Matters for Practitioners

For Indian statutory reporting, Ind AS governs, and the regulatory overlay frequently governs more than the standard does.

For group reporting to an IFRS parent, the differences must be identified and adjusted. An Indian subsidiary reporting to a UK or European parent cannot submit its Ind AS numbers unadjusted and describe them as IFRS.

For an entity asserting IFRS compliance, whether for a foreign listing, a lender, or an acquirer, the carve-outs must be reversed. Investment property carried at cost under Ind AS must be restated to fair value if the entity is asserting IFRS compliance and has elected the fair value model.

For anyone reading Indian financial statements comparatively, the carve-outs and the regulatory overlay both need to be understood before comparing an Indian entity with an IFRS reporter.

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FAQ

Can an Indian company say its financial statements comply with IFRS?

Not without adjustment. Ind AS financial statements are not IFRS compliant, because of the carve-outs and carve-ins. A company wishing to assert IFRS compliance must identify and adjust for the differences.

What is the single most significant difference?

The prohibition of the fair value model for investment property under Ind AS 40. It changes both the balance sheet carrying amount and the income statement, and it has no equivalent in any other standard.

Why does India converge rather than adopt?

Because full adoption was not considered feasible given India's legal framework, business practices, and market conditions. Convergence allows the framework to be substantially aligned while accommodating specific domestic requirements.

Are the carve-outs permanent?

Not necessarily. The Ind AS 101 long-term foreign currency monetary item relief is inherently closing, since it applies only to items existing at transition. Others could be revisited as market conditions change, and the framework has continued to evolve through amendment rules.

Which produces more practical difference, the carve-outs or the regulatory overlay?

The regulatory overlay, for most entities. RBI prudential norms, SEBI quarterly reporting and related party rules, Companies Act requirements, and IRDAI formats affect day-to-day reporting far more than the handful of standard-level carve-outs.

Should a Dip IFRS candidate learn Ind AS as well?

Learn IFRS for the examination. Learn the differences separately, as professional knowledge. Conflating the two is the specific risk, and it produces wrong answers in the exam and wrong assumptions in practice.

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Enroll with Global Fin X

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This is Post 96 of the Global Fin X IFRS Series. Previous: NFRA Inspection Reports and IFRS: What Indian Auditors Are Getting Wrong. Next: Post 97: IFRS for SMEs vs Full IFRS: Scope, Simplifications and When Each Applies.