IFRS vs.

Indian GAAP

There are a number of differences between IFRS and Indian GAAP, and
it would be appropriate to understand some of the qualitative as well as
procedural differences between the two. An analysis of differences
between Indian GAAP and IFRS is given in table.

Table: Indian GAAP vs. IFRS

SL. Particulars Indian GAAP
NO.
1 Conceptual Indian Accounting Standards are
Difference generally rule based and are less
flexible in comparison with
IFRS. Regulatory authorities like information to be presented
SEBI, ROC, RBI, IRDA, etc.
play a very important role in
defining rules.
2 Law vs. ‘Law overrides standards’ is an
Standards accepted principle in India.
Latest example is option given to and requirement of law and
the corporates regarding
treatment of foreign exchange
fluctuation in AS-11
3 Fairly Indian GAAP has direction in
Presented True and Fair presentation of
Statements financials.
4 Presentation For companies of schedule VI of
the Companies Act, 1956,
defines format of balance sheet
IFRS
At various stages IFRS
provides scope of
judgement and requires
on the basis of substance
rather than rules.
While applying IFRS usage
by investor is kept in mind
management takes a back
seat.
IAS allows overriding true
and fair concept in extreme
cases. Rather the emphasis
is on fairly presented
statements.
IAS-1 Presentation of
financial statement provides
guidelines and overall
 and its related statements. For requirements, For example
listed companies, Insurance it defines certain
companies, Banks, etc., SEBI, information, which is to be
IRDA and other regulatory presented on the face of
authorities also guide as to how balance sheet.
the financials are to be projected.
5 Extra Extraordinary items are required There is no provision of
ordinary to be separately disclosed in presenting extraordinary
items Indian GAAP. item, separately.
6 Reports Generally in India, as per IAS-1 require a business
schedule IV of the companies entity to report the financial
Act, 1956, a business entity is in the following five
required to present the following. statements:
• Balance sheet • Balance sheet
• Profit and loss A/c • Income Statement
• Notes to accounts • Cash Flow Statement
In a few cases, cash flow • Statement of change
statement is required to be in Equity
presented (AS-3), but is not • Notes to accounts
mandatory for all enterprises. • Cash Flow statements
are mandatory in
nature.
7 Depreciatio Schedule XVI of the Companies IAS-16 Property Plant and
n Act, 1956, defines minimum rate Equipments allows
of depreciation to be applied by management to charge
company. depreciation, based on
useful life of asset.
8 Revenue AS-9 Revenue Recognition IAS 18-Provides that
recognition provides an option to use either revenue can be recognized
proportionate completion when risks rewards and
 method or completed service controls have been
method. transferred to the buyer.
In construction contracts,
stage of completion method
can be applied to recognize
revenue, if reliable
valuation is possible.
9 First time No such standard is available IFRS-1 sets the standard for
adoption first time adoption of IFRS
in great detail. Previous year
comparables are also
required to be mentioned.
10 Valuation Taken over assets to be valued at IFRS 3 Business
of taken cost and not on Fair Value. Combinations allows the
over assets Assets require Goodwill to
be tested for impairment at
each balance sheet date.
11 Goodwill Does not require goodwill to be IAS-36 Impairment of
tested for impairment at each assets requires Goodwill to
balance sheet date. be tested for impairment at
each balance sheet date.
12 Reversal Permitted subject to certain Once impairment loss is
conditions. recognized on goodwill,
reversal is not permitted.
13 Share-based Allows Fair Value method, or IAS 19 provides that a
employee intrinsic value method. Hence, share-based payment to
benefits choice is available here. employees is to be taken
into account, using Fair
Value method.
14 Treasury No such guidance is available Provides detailed guidelines
share for treasury share
 transactions transactions.
15 Hyper No such standard in India IAS 29 specifically
inflationary discusses about financial
economies reporting in Hyper
Inflationary Economies.
16 Related AS 18 define related party, IAS 24 – Related Party
party where one party has ability to Disclosures defines related
disclosures control the other party or party in terms of control or
exercise significant influence significant influence, but
over the other party in making several types of exemption
financial/operating decisions. are granted, particularly for
Related parties have been relationships within a group.
specifically defined in the This is a principled-based
standard. definition and includes close
family members.

These are the major differences between IFRS and Indian GAAP.