The Ministry of Corporate Affairs (MCA) has notified the Companies (Indian Accounting Standards) Second Amendment Rules, 2025, introducing a comprehensive set of revisions to the existing Ind AS framework. These amendments, effective from the date of their publication in the Official Gazette, aim to align Indian Accounting Standards more closely with international standards (IFRS) while addressing specific regulatory and contextual needs of Indian businesses.
Here’s a concise overview of the most important updates included in the amendment:
- Ind AS 101 – First-time Adoption of Indian Accounting Standards
Several transitional provisions have been updated:
Changes related to IFRS 11 on Joint Arrangements have been incorporated.
A new clause (D9AA) provides transitional relief to lessors for lease classification under Ind AS 116.
One outdated provision (item vii) has been removed for clarity.
- Ind AS 107 – Financial Instruments: Disclosures
To improve transparency in financial reporting:
A new section has been added regarding Supplier Finance Arrangements, which are now to be disclosed with more clarity under paragraph 44JJ.
Definitions around financial liabilities have been revised to include netting agreements and supplier finance-related obligations, improving insight into liquidity risks.
- Ind AS 108 – Operating Segments
A typographical correction has been made: reference to “IFRS 108” has been updated to “IFRS 8,” the correct international counterpart for Ind AS 108.
- Ind AS 109 – Financial Instruments
Clarification has been added to confirm that certain IFRS 9 paragraphs on effective dates are not relevant to India, but the numbering has been retained for consistency.
- Ind AS 115 – Revenue from Contracts with Customers
References to outdated standards like Ind AS 17 and 18 have been updated to Ind AS 116 and 115 to reflect the current applicable guidance on leases and revenue.
- Ind AS 1 – Presentation of Financial Statements
This section saw significant changes:
Revisions clarify how to classify liabilities as current or non-current, especially when covenants are involved.
Detailed guidance was introduced on the right to defer settlement, normal operating cycles, and settlement definitions.
New paragraphs (e.g., 72A–76ZA) provide criteria and examples, helping companies classify liabilities appropriately and disclose covenant-related risks.
- Ind AS 7 – Statement of Cash Flows
Supplier Finance Arrangements have been explicitly addressed:
New disclosure requirements aim to enhance visibility into payment terms, liability structure, and potential cash flow risks.
Entities must disclose details such as payment due dates, amounts paid to suppliers, and non-cash changes.
- Ind AS 10 – Events After the Reporting Period
Minor changes replace the term “provision” with “covenant”, reflecting alignment with new terminology introduced in Ind AS 1. Amendments will be fully effective from 1st April 2026.
- Ind AS 12 – Income Taxes
A crucial update is the incorporation of the OECD’s Pillar Two model rules, which introduce:
A new exemption from deferred tax recognition for Pillar Two income taxes.
New disclosure requirements to help users understand a company’s exposure to global minimum tax rules.
- Ind AS 28 & Ind AS 32
Minor updates ensure consistency with IAS 28 and IAS 32, especially around IFRS 17 references and the treatment of treasury shares.